U.S. Stock Markets and Bitcoin Surge in 2023 Amid Fluctuations in Crypto Sector
Summary:
U.S. stock markets continue to perform strongly with the S&P 500 and Nasdaq 100 rising for nine consecutive weeks. In 2023, the S&P 500 ended with over 24% gains, while the U.S. dollar index dropped about 2%. Bitcoin soared by 155% during the same period. The S&P 500 Index and Bitcoin are showing signs of a potential negative divergence, and future performances for all are closely tied to key market indicators including 20-day Exponential Moving Averages (EMAs) and the Fibonacci retracement levels. Other cryptocurrencies like Ethereum, BNB, XRP, Solana and Dogecoin are also experiencing fluctuations.
Sustaining their robust streak, American stock markets witnessed another week of growth. The S&P 500 Index (SPX) and the Nasdaq 100 have been climbing for over nine weeks, the longest they've moved in sync since 1985's 11-week rise, as reported by Bespoke. In 2023, SPX reported over 24% gains, suggesting a confident bull market. Conversely, the U.S. dollar index (DXY) recorded approximately a 2% loss in 2023, marking its first annual loss since 2020. Anticipated rate cuts by the Federal Reserve and slowing inflation have put pressure on the dollar index for 2024.
Boosted by investors' enhanced appetite for risk, Bitcoin (BTC) soared by 155% in 2023, owing to a number of Bitcoin-specific advantages. A ruling on the spot Bitcoin exchange-traded fund applications by regulators, expected shortly, and Bitcoin’s halving in April are two key events to watch for continued momentum in the Bitcoin rally.
As for the S&P 500 Index, despite strong overall trends, the index experienced some profit-taking at 4,793. The early signs of a negative divergence in the relative strength index (RSI) suggests an erosion of momentum. The key level to monitor in the short term is the 20-day exponential moving average (4,690). If the price falls below this average, it could suggest that bulls are rapidly exiting their positions, potentially triggering a pullback to 4,650 or even the 50-day simple moving average (4,502).
The U.S. dollar index has remained within the 101-108 range over several months. A significant bounce from the present values will likely face stiff resistance at the 20-day EMA (102.26). If the price falls from the 20-day EMA, it indicates a negative sentiment and that traders are profit-taking during rallies. This could increase the likelihood of a drop below 101, possibly plummeting to 99.57.
Bitcoin has dropped to the support line of the rising triangle pattern, a crucial line for bulls to maintain. If the price stays above the 20-day EMA ($42,484), the BTC/USDT pair could attempt to break through the resistance at $44,700. If successful, the pair may reach a target objective of $49,178.
Ethereum (ETH) and BNB (BNB) also experienced downturns. ETH, however, managed to stay above its 20-day EMA ($2,270). The trend will favour the bulls if the price regains momentum above the descending channel soon. If the 20-day EMA declines, the ETH/USDT pair could possibly plummet to the 50-day SMA ($2,177) and then the support line near $2,000.
For BNB, buyers have contained the pullback between the 38.2% Fibonacci retracement level of $309 and the 50% retracement level of $300. If the support zone results in a bounce, buyers will try to push the uptrend forward. Following that, the pair could approach $338, extending to $350.
Meanwhile, XRP has been fluctuating near the moving averages, indicating no aggressive buying or selling. If the price rebounds from the minor $0.60 support, the pair could attempt to rally to $0.74.
Solana (SOL) trades above the 50% Fibonacci retracement level of $96.68, however, bulls haven't managed to regenerate the uptrend. If price rises beyond $110, the pair could target the high at $126, potentially climbing to $156.
Dogecoin (DOGE) is also witnessing fluctuations around the 20-day EMA of $0.09. the DOGE/USDT pair touched the 50-day SMA of $0.09 as of December 31. A strong rebound on January 1 indicates bull’s attempt to secure the level and if this continues, the pair could potentially reach $0.10.
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Published At
1/1/2024 9:44:09 PM
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