It may seem strange for me to start with the S&P 500 stock index.
However, contrary to what some think, US equities and cryptos are related.
All one has to do is match the last few pullbacks from the S&P to Bitcoin.
You’ll quickly see that every 20%+ correction this year from Bitcoin was matched by a 5-10% pullback from the S&P.
That isn’t coincidental.
Looking at the S&P today, several factors point to a potential local top.
The daily RSI is over 70, which has only happened twice since the March 2020 crash. Both times triggered a 5-10% correction.
There’s also heavy bearish divergence on the intraday charts.
Lastly, the 1-hour ascending channel and broadening wedge that’s been in place all year intersect just below 4,200.
If the S&P breaks below channel support near 4,150 next week, it could be the start of a more significant rotation lower.
That alone could weigh on Bitcoin and the rest of the crypto market.
Alternatively, a daily close above the 4,200 area would negate the bearish outlook.