A bearish wedge pattern indicates that Bitcoin, the world's largest cryptocurrency, could face further losses, according to a recent Bloomberg report. When the above-mentioned pattern is accompanied by declining trading volume, it usually means a continuation of the downtrend.
Notably, the same exact pattern occurred earlier in the second quarter. It heralded a 40% correction that plunged Bitcoin as low as $17,600 last month. The performance of the cryptocurrency has been so brutal that it actually recorded the worst quarter in more than a decade.
After Bitcoin managed to gain some ground last week, Sunday's sell-off threw a wrench in the bulls' business in hopes of an eventual recovery. Earlier today, the flagship cryptocurrency dropped to the $19,600 level. If the current ascending wedge pattern ends, Bitcoin will likely converge to Scott Minerd's extreme bearish price target of $8,000. To achieve this goal, it will need to surpass another 59% of the top cryptocurrencies.
Bitcoin's Correlation With Nasdaq Increases
Bitcoin's correlation with Invesco QQQ, a popular exchange-traded fund (ETF) that tracks the tech-heavy Nasdaq 100 Index, reached a high of 0.894 in nearly three years, according to a chart published by CNBC's Dominic Chu. It is worth noting that 1 point will mean a complete correlation.
The fact that the flagship cryptocurrency is trading almost like any other tech stock undermines the “inflation hedge” narrative that took the fledgling asset to new record highs last year. Instead of being treated like a legitimate store of value, Bitcoin is treated as another speculative investment. This, of course, upsets those who present the world's largest cryptocurrency as a revolutionary asset. The massive decline of the cryptocurrency came with tech stocks.
The Nasdaq Composite Index recently recorded its worst quarter since 2008 after losing 22.4% of its value. Meanwhile, Bitcoin recorded its worst quarterly performance since 2011 after falling by as much as 58%. The above-mentioned chart shows that convergence with the Nasdaq is starting to accelerate as institutional investors buy into the “inflation hedge” narrative after the US Federal Reserve unleashed unprecedented monetary support. Due to the double hit of sinister technical signals and the negative macro backdrop, Bitcoin price is expected to continue falling. The Fed is expected to announce another jumbo rate hike this month, after the latest jobs report surprises to the upside.