18.05.202211:13 Forex Analysis & Reviews: JPMorgan believes that the fall of the S&P 500 has not ended: in this case, what awaits Bitcoin?

Over the past seven weeks, Bitcoin and the cryptocurrency market have been in the framework of a powerful correction. Against the background of mass sales, the daily trading volumes of the asset reached local highs, and volatility gave room for speculation. At the same time, buying activity manifested itself only when Bitcoin reached $ 24k. Given the nature of the price rebound in this range, it was possible to expect the completion of the correction and the gradual emergence of an upward trend. However, there are good reasons to believe that the ultimate goal of Bitcoin's downward movement has not yet been achieved.

Almost every article is related to the impact of the Fed's policy on Bitcoin quotes and the entire market. We have already analyzed the main reasons for such a drop, so we will focus in more detail on the new conclusions of JPMorgan experts. Michael Wilson, the chief strategist at the investment bank, said in a note to clients that there is every reason to believe that the S&P 500 index will continue its downward movement. The likely final target for the asset will be around $ 3,400. The analyst justified the forecast by technical factors, as well as a personal assessment of what is happening.

Such a bold assessment of the further price movement has a vividly negative color. As of May 18, SPX is in the support zone and is quoted at around $ 4k. The index made a strong rebound from the $ 3.8k area, where the local support zone passes. It is important to note that the fall in the SPX price ended at the very moment when the US dollar index began a correction. This indicates the codependency of the two indicators. While the DXY is in a local downward correction, high-risk assets like the S&P 500 are trying to recover as much as possible.

Returning to the further decline of the stock index, it should be noted that there is a huge potential for decline. If we take the current asset price as a reference point, then the drop will be another 16.8%. This is also a negative factor for the cryptocurrency market because the correlation between SPX and Bitcoin remains at a high level. Bitcoin also reached the $ 30k mark during the correction of the US dollar index, and the trajectory of the digital asset price movement completely coincides with the S&P 500 index.

With this in mind, it can be assumed that the cryptocurrency will follow the stock indicator and lose another 10%-15% of the current value. If we take the current indicators of the coin as a basis, then the potential of a downward price movement provoked by correlation with SPX ends in the area of the formation of the previous local bottom of around $ 25k.

The probability of such a decline is high, but Bitcoin still has time for a local upward spurt due to the local correction of DXY. A "bullish wedge" pattern is forming on the four-hour chart. With a bullish breakdown, the potential is equal to $ 35k, but with a downward breakout, the price will immediately go to the local bottom.

Technical indicators hint at an upward exit beyond the narrowing range. The RSI index is in a bullish zone, and stochastic has formed a bullish intersection, which indicates the emergence of a medium-term upward trend. The MACD is also moving along the green zone, and therefore we can expect a local surge in buying activity and an attempt to reach $ 35k.