A quant has explained why Nasdaq’s recent retest of a critical support level may help Bitcoin reverse its own trend.
Nasdaq-100 recently retested a critical support trendline
As noted by an analyst in a CryptoQuant afterNasdaq-100 is currently above a support line that has historically been important.
Nasdaq-100 (NDX) is a stock market index that includes 102 stocks issued by 101 of the largest non-financial companies (by market capitalization) listed on the Nasdaq stock market.
Here’s a chart showing how this trendline has worked as a jump in the price of the index over the last decade:
The value of the asset seems to have touched this line recently | Source: CryptoQuant
As you can see in the chart above, the price of NDX has been supported by this trendline five times since the year 2010. In each of these cases, the line has slowed down the decline of the index and therefore reversed it. backup.
Recently, the Nasdaq-100 index hit this trendline again, and so far has managed to stay above it.
The Quant notes that this retest could have marked the end of the last downtrend, and perhaps also the point of return of a bullish trend.
However, if the trendline is lost instead, it would show the extreme strength of the downtrend and suggest that there is more downtrend for the market.
At the same time, Bitcoin has also tested a support line, as the analyst highlighted in the chart:
Looks like BTC is also just above a support trendline right now | Source: CryptoQuant
In the past year or so, Bitcoin has shown strongly correlated with the stock market. The reason behind this correlation is the rise of institutional investors in the crypto who treat it as a risk asset.
The quant believes that if the current retest of support in the stock market proves successful, BTC is also expected to see a reversal of itself due to its correlation with the stocks.
Bitcoin price
At the moment of writing, The price of Bitcoin hovering around $17.2k, up 1% over the past week. Over the past month, the crypto has lost 7% in value.
Below is a chart showing the trend in the coin’s price over the past five days.
The value of the crypto seems to have observed a sharp surge to $17.2k over the past day | Source: BTCUSD on TradingView
Featured image from Maxim Hopman on Unsplash.com, charts from TradingView.com, CryptoQuant.com