Following weakness in the stock market, a crypto strategist and trader has warned Bitcoin holders that BTC could witness a big capitulation.
Bitcoin Could See a Drop of Nearly 40%
According to Twitter user Cantering Clark, Bitcoin may drop nearly 40% from its current levels if the S&P 500 (SPX) continues its downward trend.
“If the S&P 500 drops down to the next major region between 3200-3400 [points], I think the right assumption would be that crypto beta would be at least 2-3x that, which at a minimum means Bitcoin retests the ledge of the highest volume node of the last five years – so around $12,000-$13,000,” tweeted Cantering Clark.
If the S&P drops down to the next major region between 3200-3400, I think the right assumption would be that crypto beta would be at least 2-3x that, which at a minimum means Bitcoin retests the ledge of the highest volume node of the last 5 years – So around 12-13k. pic.twitter.com/rwnZUdujKI
— Clark (@CanteringClark) October 1, 2022
“I know people will quote idiosyncratic strength recently, which strength has been notable, but as soon as the SPX starts pulling multi-sigma moves downward in short time, all risk assets fall in line,” added him.
According to final S&P 500 closing prices on Friday, the index closed at 3,585.61 points, down 1.39% from its previous June 2022 low of 3,636 points.
“My theory is that Bitcoin had made its moves in advance. It reached June lows again many days before Spx did. So yeah it remained flat till Spx came to the June lows and then ultimately lower yesterday,” said one Twitter user.
Bitcoin Bulls Could Inspire Some Confidence, Cantering Clark Says
Bitcoin bulls, however, could inspire some confidence in the short term if they reclaim the $20,000 price level.
“If we can break above these local highs, I think Bitcoin sees some momentum come in,” tweeted him.
If we can break above these local highs I think Bitcoin sees some momentum come in. pic.twitter.com/i19DzT33Va
— Clark (@CanteringClark) September 30, 2022
Cantering Clark’s outlook on Bitcoin is also shared by fellow pseudonymous analyst Jack. A rally above $20,000 will likely lead to Bitcoin gaining bullish momentum, according to Jack.
“I can be a bear all I want but if this jumps the creek, it’s a damn fine setup to long and good reason to divorce the narrative and play the technicals instead,” tweeted Jack.