Bitcoin price regained the $11,000 and did not stop all the way until it reached the $11,700 area. Curiously enough, the bounce higher came after it formed a triangle as a reversal pattern at the $10,000, a dynamic resistance level that turned into support.
During the pandemic so far, Bitcoin correlated with the gold and the U.S. stock market. A close analysis of Bitcoin price’s correlation with the two reveals that during the 2020 pandemic so far, the correlation exceeded 0.5, and even higher levels during the months the USD fell dramatically. As such, the diversification benefits for adding an asset like Bitcoin to a portfolio do not exist.
However, on the recent move higher, Bitcoin did the opposite of what the USD did. More precisely, the USD strengthened, while Bitcoin did so too. Moreover, gold fell, While Bitcoin did not. Furthermore, stocks corrected, while Bitcoin kept its recent gains.
More Investors Turn Their Attention to Bitcoin
After Square reveals a $50 million investment in Bitcoin, another investor did so too. The famous Stone Ridge, an asset manager with billions under management, revealed a Bitcoin position worth over $110 million too.
With investors turning their attention to Bitcoin, it comes as no surprise that Bitcoin price is resilient and the recent correlations break.
Bears would want to short at market and add either at the upper dynamic resistance or at the lower dynamic support. The $10,000 level still looks pivotal, and, as we get closer to the U.S. elections, a higher USD move may trigger the Bitcoin price back to the $10,000.
The invalidation level for this bearish scenario comes at $12,500, quite high when compared to the proposed levels. However, this is a contrarian trade, so traders should keep the volume as tight as possible.