Bitcoin Price

Why Analysts Worry of Correction After Bitcoin Rallied to $7,800

BTC now trades at $7,600 after experiencing a firm rejection at $7,800 for the second time.
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After consolidating below the highs of $7,400 for two weeks, Bitcoin finally broke out late last week, on Thursday, rallying past the highs to tap $7,800 in a spectacular fashion.

As Blockonomi reported, it was a move that liquidated nearly $70 million worth of short positions on BitMEX, suggesting the move was a so-called “short squeeze.”

This was followed by Bitcoin “fading the rally,” returning to $7,400 before making an attempt at $7,800 again on Sunday evening. That failed: BTC now trades at $7,600 after experiencing a firm rejection at $7,800 for the second time.

Bitcoin rally to $7,800
Chart from

Bitcoin’s inability to break past $7,800 — a key historical level — has analysts convinced that it may be time for the rally, which has brought the cryptocurrency over 100% higher than March’s capitulation lows on “Black Thursday,” to end.

Analysts Worried of Bitcoin Correction as Price Nears Resistance

Cryptocurrency trader LightCrypto, who called the rally towards $8,000 nearly two weeks ago, has become a seller at current prices, writing “how obvious” it is that $7,800 has become a zone of resistance, marked by a “loss in momentum on orderflow [data] from earlier today to Asia’s [Monday] AM session.”

Light added that the recent price action has formed a “swing failure,” when an asset attempts to break past a historical resistance or support level but fails, leaving a strong wick on high volumes, then often a trend reversal. In Bitcoin’s case now, a trend reversal will bring prices to the downside.

Bitcoin price resistance
Chart from @LightCrypto (Twitter)

Another trader with the moniker of Salsa echoed this, explaining how he sees many spot market sell walls from $7,800 to $8,000, which has him hesitant to long or buy Bitcoin:

Both stalling at their respective rally’s highs, not what I expected to be bearish. That said, what’s bothering me from going long is the spot sell walls up to 8k. $7800-8000 is a tough nut to crack.

Stocks Could Reverse: Bad for Crypto

Stocks paint a similarly-bearish picture for BTC and the crypto market.

According to a Friday research note from strategists at Goldman Sachs reported by Bloomberg, there’s likely to be a shift of momentum in the S&P 500 index, which has rallied 35% in the past month or so.

The analysts said that with large-cap stocks, like Microsoft and Amazon, outperforming smaller-cap companies as of late, they’re worried a “large” downturn in markets will follow suit:

Sharp declines in market breadth in the past have often signaled large market drawdowns. Narrow breadth can last for extended periods, but past episodes have signaled below-average market returns and eventual momentum reversals.

They specifically pointed to the stock-market slowdowns of the Dotcom Bubble and the Great Recession, which saw the breadth of the market narrowed prior to the eventual crashes that transpired.

While many say that Bitcoin should be unaffected by yet another crash in the S&P 500, citing how it is uncorrelated with traditional asset classes, the Kansas City Federal Reserve branch recently found this narrative to be false.

The central bank branch found that during periods of economic “stress,” Bitcoin actually trades with a slight positive correlation to the S&P 500. On the other hand, during the same time frames, 10-year Treasury bonds and the price of gold has operated with a slightly negative correlation to the S&P 500, showing that BTC has not achieved safe-haven status.

Not to mention, when stocks crashed in March, so did BTC and so did gold, even, for a short period of time. History repeating will see the crypto market tumble again if stocks fail to hold.


I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact

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