The cryptocurrency market has changed significantly. Investors are no longer buying Bitcoin simply because its price is rising. The cryptocurrency is gradually becoming more of a traditional asset, while its growing correlation with tech stocks is breaking down some of the market relationships of the past. Let’s analyze the current situation and develop a trading plan for the BTC/USD.
The article covers the following subjects:
Major Takeaways
- The S&P 500’s record high triggered a pullback in Bitcoin.
- Citigroup expects ETF holdings to increase by $5 billion.
- Competition from the tech sector is holding back cryptocurrency.
- Long positions can be opened on pullbacks from $81,900, $81,200, and $79,500.
Weekly Bitcoin Fundamental Forecast
While the S&P 500’s record high in August might once have been expected to push Bitcoin to new heights, the cryptocurrency’s recent decline now seems logical. Not long ago, a 43% quarterly gain was considered almost routine for BTC. Today, forecasts from major banks have become more moderate, while competition from big tech companies is raising doubts about whether a rising global risk appetite is necessarily positive for digital assets.
As the regulatory framework becomes more transparent, the cryptocurrency market is becoming increasingly institutionalized, and Bitcoin is gradually transforming into a traditional asset rather than an instrument purchased simply because its price is rising. As a result, volatility is declining, while third-quarter performance remains impressive. After all, performance is relative: compared with Bitcoin, the gains in the S&P 500 and gold have been far more modest.
At its core, the latest BTC/USD surge was driven by a return to an old catalyst: distrust of fiat currencies and government-issued bonds. Bitcoin benefits from demand for DeFi assets, which investors tend to turn to when they lose confidence in a country’s economic policies. From this perspective, the cryptocurrency’s rally following the Treasury’s decision to increase Treasury buybacks appears logical.
Bitcoin ETF Net Flows
Source: Bloomberg.
Government intervention in the debt market has fueled interest in the debasement trade, contributing to $4.6 billion in ETF inflows. Citigroup expects holdings in specialized exchange-traded funds to increase by another $5 billion over the next 12 months and forecasts the BTC/USD to surge to $113,000. Alongside growing demand for tokens, rising crypto adoption and a favorable macroeconomic backdrop are cited as bullish factors.
Based on historical parallels, Citigroup’s assessment is certainly plausible. The still-strong US economy, combined with the Fed’s measured approach to monetary policy, is creating what is often described as a Goldilocks scenario—one that is particularly favorable for risk assets, led by the S&P 500. However, the crypto market is competing with technology companies for investors’ capital. For now, it is artificial intelligence that is driving stock indices higher.
S&P 500 Index Performance
Source: Wall Street Journal.
If other sectors join the S&P 500 rally, Bitcoin will reestablish its previous correlations with risk assets and rise as risk appetite strengthens. For now, the BTC/USD positioning appears stable, but the cryptocurrency clearly lacks a fresh catalyst.
Weekly BTC/USD Trading Plan
Against this backdrop, a short-term strategy of selling Bitcoin—including on a break below the 84,000 support level—looks attractive. This could be followed by a shift to medium-term long positions if the BTC/USD rebounds from the $81,900, $81,200, or $79,500 levels.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of BTCUSD in real time mode
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