Bitcoin Trades Above $50K
Bitcoin continues its seemingly endless march higher, trading above $50,000 per coin for the first time ever at approximately 12:30pm London time today. Bitcoin in particular, and cryptocurrencies in general, have been an extremely bullish market sector over recent weeks and months, and have arguably been the subject of successful bullish market manipulation too. The price chart below shows how Bitcoin has risen by more than 65% since the start of 2021 alone – a period of only six weeks.
S&P 500 Index Approaches 4,000
Almost all major stock markets globally are in bull markets, with many stock indices trading at all-time or multi-year highs. The world’s largest stock market index, the S&P 500, did not trade yesterday due to the President’s Day holiday in the U.S., although markets will be open for the week starting today. At the time of writing, the U.S. market had not yet opened, but last Friday closed right at the weekly high, and off-hours trading on futures exchanges shows that the index is likely to open higher than Friday’s close, at about 3,955.
The S&P 500 Index has risen by approximately 5% since the start of 2021.
The technical picture in the Index looks bullish, and with the 15-day average true range currently valued at about 44 points, if today sees another firm rise, the price is quite likely to touch the major round number overhead at 4,000.
What do Bitcoin and the S&P 500 Index at Highs Mean for Me?
Assets like Bitcoin and the S&P 500 Index are the subject of intense speculative interest as they hit all-time highs. When all-time highs are reached, there has always been a historical bias in favor of buyers in terms of traders’ positive expectancy. In simple terms, the best chance of profit is on the long side, although a hard stop loss must be used with discipline to make this edge work relatively safely.
Yet we are not just seeing all-time highs in these assets. We are also seeing them cross, or in the case of the S&P 500 Index, be about to cross, major round numbers for the first time. Many traders and analysts have argued that when these psychological levels are breached decisively, they tend to generate additional bullish momentum, although this claim has proven difficult to quantify.
Bottom Line
Two of the biggest “hot hands” in the market right now are Bitcoin and stock market indices. These assets are available to trade at many Forex/CFD brokerages. Although there can be short-term turbulence when major round numbers are reached for the first time, the degree of bullish momentum we are seeing in these assets strongly suggests the odds are in favor of higher prices, making these assets obvious buys. Due to strong potential for dramatic drops in value in these assets, however, a relatively tight, hard stop loss should be used by traders hoping to exploit this edge.