BTC price remains in a tight range this week, continuing a trend that started in November last year. It is stuck inside the support at $90,000 and the resistance at $108,000. Bitcoin price may follow the S&P 500 index to a new record high as the Fed nears the end of the quantitative tightening process.
BTC Price to Benefit From the S&P 500 Surge
Bitcoin price has been left behind by American stocks this year. It remains in a consolidation phase as the top blue-chip indices like the S&P 500 and Nasdaq 100 sit at a record high. The S&P 500 index rose to $6,115, while the Nasdaq 100 has jumped to $22,126.
These indices have jumped as investors have largely ignored the ongoing warnings on Tariffs by Donald Trump. These tariffs, if implemented, would likely affect most companies, especially those in the construction, pharmaceutical, manufacturing, and retail sectors.
Therefore, the S&P 500 index surge is likely because investors expect that Donald Trump is using these tariffs as a bargaining chip against top trading partners.
The soaring stock market may be a signal that investors have embraced a risk-on sentiment, which may push some to the cryptocurrency market. Recently, however, the correlation that existed between Bitcoin and the S&P 500 index has eased, as shown below.
Bitcoin and S&P 500 correlation
Fed to End Quantitative Tightening
A potential catalyst for S&P 500 and BTC price is that the Federal Reserve is about to end the quantitative tightening (QT) process. This detail was revealed in Wednesday’s FOMC minutes, which noted:
“Regarding the potential for significant swings in reserves over the coming months related to debt ceiling dynamics, various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of the event.”
QT is a process where the Fed reduces the money supply in the economy by reducing the size of the balance sheet. It is the opposite of quantitative easing, a form of stimulus. Ending QT may be a bullish catalyst for the value of BTC.
BTC Price Technical Analysis
The weekly chart gives a bullish Bitcoin price prediction. It formed a cup and handle pattern that ended in November when it made a strong bullish breakout. The C&H pattern comprises a horizontal resistance and a rounded bottom. It also has a handle, which in this case, formed between March and November last year.
Bitcoin Price Chart
Bitcoin is now forming a bullish flag pattern. This pattern has a vertical line and a rectangle, and is usually a highly bullish sign. Therefore, the coin will likely surge, and possibly hit $122,000 in the near term. This target is based on the cup’s depth, which is then measured from its upper side. A crash below $90,000 will invalidate the bullish view.
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