Bitcoin Weekly: Tech Stocks Are at an Inflection Point

Bitcoin started the week strong, but then failed to follow through, and fell back to close the week flat. Meanwhile, US stock indices are nearing an inflection point. Either the war in the Middle East stops soon, or prepare for a breakdown.

I usually don’t cover stock markets in these bitcoin updates. But today I will.

Why?

Because the NASDAQ 100 index is nearing an inflection point. This index of the largest US tech stocks has since September been forming a clear rectangle on the daily chart. As of this morning it’s sitting right at the lower edge of this rectangle. This level also happens to coincide with the 200 day EMA, making it much more significant.

If this level breaks, we have both a confirmed rectangle topping pattern, and also a break down below the 200 day EMA. This would signal a shift in trend, and I would turn bearish.

Why does this matter for bitcoin?

Bitcoin has historically been well correlated with tech stocks. So should this breakdown happen, it will likely be good night for bitcoin (and the rest of crypto) for some time. If this level holds, on the other hand, there is still room for bitcoin to go off on the bear market rally that’s been my base case for the last couple of weeks.

In these situations, it’s easy to rush ahead and call things too early. But so far, the Nasdaq chart is at support. It looks dicey for sure, but it hasn’t broken down yet, and I won’t call a breakdown until it actually happens.