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bitcoin stock market tank Dow Jones spx sp500

US Stock Indices Dow Jones, SPX Tank, Taking Down Bitcoin In Tandem

Tony "The Bull" by Tony "The Bull"
3 years ago
in Bitcoin, Technical analysis
Reading Time: 2 mins read

Bitcoin has been collapsing after failing to hold $11,000, and it could be thanks to negative sentiment surrounding a tanking stock market that’s taking the crypto market down in tandem.

Here’s why things could get really bad for Bitcoin and the rest of the crypto space if major US stock indices continue to plunge.

Major US Stock Indices S&P 500, Dow Jones, Drop On Today’s Quadruple Witching

The S&P 500 is down more than 7% from local highs. The Dow Jones Industrial Average, has also lost 5% from its recent local peak high, faring slightly better than the index from Standard and Poor’s.

The stock market is dropping and dropping hard after several major stock indices set new all-time highs last month.

As soon as the month turned, however, stocks turned downward, and so did Bitcoin.

Related Reading | Bitcoin Collapse Retests Key Weekly Level Never Lost During Last Bull Run

The top crypto asset by market cap actually led the market wide dump by almost 24 hours, but the stock market followed closely behind, and now has since taken over as the primary drive behind the downside momentum.

Making matters worse for Bitcoin and the rest of crypto, is the fact that the ongoing correlation between the disruptive asset class and traditional equites has yet to be shaken off.

The correlation – if stocks see another Black Thursday style fall – could drag Bitcoin down further in tandem.

bitcoin dow spx

BTCUSD Versus SPX Versus DJI Correlation Chart Comparison | Source: TradingView

Bitcoin Could Get Dragged Back Down To Black Thursday Lows If Stocks Tumble Again

The leading cryptocurrency by market cap set a local high at $12,400 but since came crashing down. After a valiant defense by bulls at to hold strong at support below $10,000. the cryptocurrency quickly found itself trading back at $11,000.

The recent rally, however, may have been a bearish retest of support turned resistance, just in time for the stock market to take the crypto market down further.

The reason for the sudden rise in turbulence across the stock market, could be due to a spooky-sounding event called the quadruple witching.

Related Reading | Bitcoin, Metals, And Equities “Will Fly” If Dollar Downtend Deepens

This quarterly stock options and futures expiry can cause an explosion in volatility across stocks, and that could be what is prompting stocks to suddenly move lower.

If the drop gets severe in stocks, Bitcoin is at risk of another Black Thursday type drop to new lows. The added risk of the coming election, profit-taking, portfolio rebalancing, and panic from another round of the pandemic could also be to blame.

Whatever the case may be for the bearish turn, stocks could end up taking Bitcoin down with them once again.

Featured image from Deposit Photos, Chart from TradingView
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Tony "The Bull"

Tony "The Bull"

Tony is the “always-on” Editorial Director and Head of Research at NewsBTC, leading a talented team of writers and editors across several different global time zones. Tony is also the founder of CoinChartist.io – an educational website focused on crypto trading. Partners include Elliott Wave International, TradingView, and more. Tony’s background includes an extensive, award-winning media production career and over fifteen years of publishing operations and management. In the past, Tony has founded several media websites and his content has been read billions of times. Past clients include the BBC, Fidelity, and many others. Tony "The Bull" is a level 3 CMT student (passed level 1 & 2), technical analyst, Bitcoin supporter, and avid speculator. He owns a python named Satoshi. Tony longs for the day when money is separated from the state. Tony is deeply fascinated by core market principles such as Elliott Wave Theory as they tie into mathematics like Fibonacci ratios. Market timing though DeMark indicators, Ichimoku, Gann tools, or Hurst Cycle Theory are also of key interest. Tony provides completely original content driven by exclusive, independent research. For more insights and education from Tony, check out his free TonyTradesBTC Telegram channel. Follow @TonyTheBullBTC on Twitter. You can also follow @CoinChartist_io on Twitter and subscribe on YouTube.

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