Bitcoin minimizes correlation of S&P 500 and reaches $ 9.7K as gold increases

• Bitcoin closed above $ 9,700 in hopes of ending its previous decline by half in the midst of growing demand for risk reduction.
• The cryptocurrency has broken its short-term correlation with the S&P 500 after the Federal Reserve gave bleak economic prospects.
• Instead, the BTC / USD exchange rate rose with rival Gold Safe.

Bitcoin extended gains by a day after downplaying its positive correlation with the U.S. stock market. United States

The main cryptocurrency jumped 4.28% to $ 9,705 before the London opening bell. The upward movement came as part of a larger upward correction to its May lows near $ 8,100, further reinforced on Wednesday by the speech by Federal Reserve Chairman Jerome Powell.

Bitcoin contributed about $ 10 billion to its market capitalization when Powell painted a grim picture of the economic outlook for the coronavirus pandemic. The Fed chairman said the economies were underperforming, which could amount to another stimulus in addition to the existing $ 3 trillion in financial aid.

Traders have taken the news as a sign of a short-term increase in the Bitcoin market. The cryptocurrency rose by around $ 500 on Wednesday, showing no signs of falling during the current session.

S&P 500

On the other hand, Wall Street indices reacted negatively to Mr. Powell's speech, with The S&P 500 closes lower on Wednesday 1.7% to 2,820 points. The American benchmark United States It had formed a positive correlation with Bitcoin after falling out of sync in March 2020.

Mati Greenspan, seasoned analyst and founder of Quantum Economics, together the two markets could resume their correlation at any time. He noted that Bitcoin had decoupled from other markets as it prepared for a major technical update on May 11. The "halving" has changed the dynamics of cryptocurrency in the short term.

"Since this event, the orange currency has increased by 8%, while the American stock market has fallen by 4%," he said.

Michaël van de Poppe gave a different perspective. The prominent cryptocurrency trader tweeted on Thursday that the correlation between Bitcoin and the S&P 500 has increased under the influence of a global crash. But now, the cryptocurrency was reducing risky assets, such as gold and silver, more than it was affecting the U.S. stock market. United States

"We are back in a market where every significant 25-40% drop is a great opportunity to get into the game," said Poppe.

The spot price of gold rose 0.8% after Powell's speech on Wednesday. The yellow metal fell but held gains above $ 1,700 on Thursday as the Fed chairman downplayed the possibility of negative interest rates.

$ 10,000 Bitcoin

Support fundamentals have improved Bitcoin's technical outlook in the short term. The jump of cryptocurrency above $ 9,500 has created a solid floor to attempt a recovery towards $ 10,000.

Bitcoin's relative strength indicator showed there was room for more benefits. During this time, the price moved in an ascending channel which amounted to a continuous race. As of now, Bitcoin intends to retest its maximum YTD near $ 10,500.

photo by Aleksi Räisä in Unsplash