The BTC/USD pair managed to leave the 19,000-22,000 consolidation range and bulls predict its growth to 50,000 within five years. Moreover, Bitcoin has become the most popular cryptocurrency. According to CivicScience, about 11% of Americans quit their jobs due to generating profits from cryptocurrency transactions. Redfin notes that 11.6% of respondents said they had used tokens when buying real estate.
Although the overall numbers are relatively low, they exacerbate US economic problems. The US economy is facing a shortage of employees amid Americans' reluctance to return to the workforce and soaring housing prices. All these factors fuel inflation. However, the Fed does not intend to lay the blame for the situation on Bitcoin. The key point is that the crypto industry exert greater influence on people's lives as well as the financial markets.
In mid-2020, BTC capitalization totaled $250 billion in mid-2020. This figure is extremely low compared to $18 trillion in circulation as the M2 aggregate. However, the asset's capitalization rose to $3 trillion by the end of 2021. Moreover, the figure fell to $1 trillion amid a large BTC/USD sell-off, though the bulls are optimistic. They often buy tokens at the opening of the US stock market and sell them at the closing. Previously, this strategy was not effective as it made more losses than profits. However, the current situation has changed. The growing influence of cryptocurrencies on the economy and financial markets, as well as the close correlation with the Nasdaq Composite, force traders to change their strategies.
Profitability dynamics of Bitcoin strategies
It is obvious that positive dynamics of the US stock indices became the main drivers of BTC/USD breakout beyond the upper boundary of the consolidation range of 19,000-22,000. The major reason for the rise of S&P 500 and other indexes was strong corporate reports, favorable macroeconomic statistics in the US states, and some weakening of the US dollar. The US economy will not decline due to higher interest rates. Moreover, it is unlikely to plunge into recession. This fact suggests a bottom forming below both the stock indices and BTC amid over-the-top investor pessimism.
It is true that the situation when the share of bonds in asset managers' portfolios exceeds the share of stocks is extremely rare.
Dynamics of shares and bonds ratio in investor portfolios
The S&P 500 rose dramatically after the recessions in 2009 and 2020. If the situation repeats, it's positive news for BTC/USD.
Technically, the pair has worked out "Splash and Shelf" pattern outlined in the previous article. Currently, it is transforming to the Dragon. Therefore, it is advisable to hold long positions on the breakouts of resistances at 24,350 and 25,300. When the BTC/USD pair returns to 20,300, I recommend selling it as part of the Deception and Reversal pattern.
