The Nasdaq Index (NDX) fell last week, leaving behind a candle that looked terrible. However, when measuring the strength of potential trends, technology stocks may have more room for development
The Nasdaq Index (NDX) fell last week, leaving behind a candle that looked terrible. However, when measuring the strength of potential trends, technology stocks may have more room for development. If that's the case, based on new historical comparisons, Bitcoin may be bullish.
NASDAQ (NDX) gave back its recent gains before the Federal Open Market Committee (FOMC) meeting
Due to traders taking profits and repositioning before Wednesday's FOMC meeting, the NASDAQ index has fallen by more than 3% from its 2023 high set last week. At this meeting, the market generally expected the Federal Reserve to raise interest rates by another 25 basis points.
The rising interest rate environment in 2022 will lead to a bear market for stocks and Cryptocurrency. The idea of the Federal Reserve suspending interest rate hikes helped the market recover throughout the year. Resuming interest rate hikes so quickly may harm the recent market rebound.
However, the current bullish trend may be too strong to prevent the top US technology stock index, the Nasdaq, from reaching a historic high. This is based on the weekly average direction index of NDX.
In the figure below, the NDX weekly average direction index is at the level before the bull market of Cryptocurrency in 2020. It is worth noting that during this period, the performance of technology stocks was far better than that of Cryptocurrency.
Why can this setting revive bullish Bitcoin
It is also worth noting that technology stocks often lead a broader market recovery. Historically, this sign of healthy economic recovery has led to the booming development of Cryptocurrency such as Bitcoin and Ethereum due to the confidence generated.
In the above comparison, after a brief pullback in technology stocks, Bitcoin subsequently erupted and dominated with extreme outperformance. The most significant similarity between then and now is that NDX and BTCUSD exhibit the same trend intensity as when there was a deviation from the previous related price trend.
In the last event, Bitcoin and NASDAQ both retreated at the same time, but when it resumed the bullish trend, it returned to a totally different Cryptocurrency. It was the parabolic BTC that soared from $10000 to $60000 in just a few months. Since each coin of Bitcoin is close to US $30000, if the price trend is similar, then a performance of 6 times on this basis may make the price of the top Cryptocurrency close to US $180000 per coin.
(Personal opinion, does not constitute investment advice)
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