A widely followed crypto analyst is warning traders that altcoins are close to being eviscerated as leading digital asset Bitcoin (BTC) gets close to dipping below key support levels.
Kevin Svenson tells his 101,000 Twitter followers that while Bitcoin and Ethereum face downside risk, altcoins stand to take the brunt of a further market correction.
“There is downside risk showing for Bitcoin.
I’m not worried about BTC or ETH. I will be holding those in a continued bear trend scenario and just stacking more.
But [altcoins] would be obliterated in a bear trend. Like absolutely destroyed. Have caution.”
The strategist says that BTC has not closed a single daily candle below its 600-day simple moving average (SMA) since early 2020, which is currently acting as critical support, with the price bouncing off it more than a dozen times in the last 2 months.
“BTC has not closed a daily candle below the 600-day simple moving average since the COVID-19 crash. The 600-day simple moving average has also been the main support for this range since mid-January.
$39,250 is where [the] 600-day simple moving average is at the moment.”
Svenson also notes that Bitcoin and the S&P 500 (SPX) have a degree of positive correlation with the U.S dollar index (DXY), which pins the USD against a basket of other fiat currencies. He points out that with DXY climbing upward, the stock market could face more downward pressure, thus potentially threatening to take Bitcoin with it.
“It appears the SPX is once again starting to move into an inverse correlation with the U.S. dollar index. Contrary to what most people think, BTC and the SPX have had some degree of positive correlation with the [U.S dollar] since early 2021.”
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