A quant has explained why Nasdaq’s recent retest of a critical support level could help Bitcoin reverse its own trend.
The Nasdaq-100 recently retested a critical support trendline
As one analyst pointed out in a CryptoQuant post, the Nasdaq-100 is currently trading above a historically important support line.
Nasdaq-100 (NDX) is a stock market index comprised of 102 stocks issued by 101 of the largest non-financial companies (based on market capitalization) listed on the Nasdaq exchange.
Here’s a chart showing how this trendline has acted as an index price bounce over the past decade:
The value of the asset appears to have touched this line recently | Source: CryptoQuant
As you can see in the chart above, NDX price has been supported by this trend line 5 times since 2010. In each of these cases, the line halted the decline in the index and consequently secured it in reverse.
Recently, the Nasdaq 100 index touched this trendline again and has managed to stay above it so far.
The quant notes that this retest could have been the end of the recent downtrend and also the return point of an uptrend.
However, if the trendline is lost instead, it would show the extreme strength of the downtrend and suggest that the market may be headed for another drop.
At the same time, Bitcoin has also tested a support line, as the analyst has highlighted in the chart:
It looks like BTC is just above a support trendline right now | Source: CryptoQuant
Over the past year or so, bitcoin has been shown to be highly correlated with the stock market. The reason for this correlation was the rise of institutional investors in crypto who treat it like a risk asset.
The quant believes that if the current support retest proves successful in the stock market, BTC could also expect a reversal of its own due to its correlation with stocks.
bitcoin price
At the time of writing, the price of Bitcoin is 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 evolution of the coin’s price over the last five days.
The value of the crypto seems to have seen a sharp surge to $17.2K over the past day | Source: BTCUSD on TradingView Featured image by Maxim Hopman on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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