Bitcoin’s price plunged below $67,000 briefly early on October 21 before roaring back. They conclude the drop is because its rise is tied to the U.S. stock market, which also was off. The price correlation between Bitcoin and the S&P 500 is presently 0.63, meaning Bitcoin has a strong relationship with the price movement of its other two assets.
Ahead of important earnings reports that day, both the S&P 500 and Dow Jones indices fell. Barring wider macroeconomic uncertainty, such as rising inflation expectations or concerns over government spending, the two markets’ downturn is believed to be caused by general market pressures.
Bitcoin Support Level Critical
However, investors are in wait mode, fearing that the U.S. Federal Reserve may take some action to pinch off inflation from being too high at 2%. It also adds to the uncertainty and the upcoming U.S. presidential election looks competitive between Donald Trump and Kamala Harris. Traditionally, traders wait for major moves until after elections, hoping for greater market clarity after the election.
“Other contributing factors to Bitcoin’s fall in price included growing open interest (OI) in July, pulled back long positions by large investors (‘whales’) and a rally on sovereigns,” remarked analyst Justin Bennett. Bennett, who predicted a price pullback, said the U.S. election was a key catalyst.
Without this period of derisking, the markets could have been facing real turmoil going into Election Night, he warned. According to a recent post by Bennett, the first most important Bitcoin support level to be valued is around $65,800. A hold above this level would negate his expectations for further declines.
Currently trading at around $67,700, Bitcoin is almost 2% lower over the last 24 hours, according to the latest data from CoinMarketCap.
