Bitcoin is gaining traction as a safe haven asset amidst economic instability and trade tensions, demonstrating a bullish potential while major US stock indices show signs of downturn. Key resistances and downtrends in Bitcoin may prompt significant price movements if overcome. Conversely, the Nasdaq 100, S&P 500, and Dow Jones indices are facing pressure due to slowdown in the AI sector and escalating trade conflicts with China.
Bitcoin is demonstrating greater reliability as a safe haven asset when compared to the US stock market, amidst persistent trade tensions and recession fears. This month, Bitcoin has fluctuated between $X and $Y and is close to a bullish breakout, contingent on overcoming a crucial resistance level. In contrast, major indices such as the Nasdaq 100, S&P 500, and Dow Jones are expected to face additional decline.
According to the daily chart, Bitcoin has established a double-bottom pattern at $76,650 and is currently testing the neckline around $88,660. The asset confronts robust resistance at both the 50-day and 200-day moving averages. Additionally, Bitcoin must surpass a descending trendline linking significant peaks since January 20th to progress.
By overcoming these critical moving averages, Bitcoin may invalidate the existing death cross pattern, which could catalyse a rally aimed at reaching significant psychological thresholds of $90,000 and later $95,000.
In contrast, the American stock market is increasingly vulnerable to further downturns, as the Nasdaq 100, S&P 500, and Dow Jones indices have entered correction territory with declines exceeding 10% from their peak levels this year. All three indices have encountered a death cross—an ominous technical indicator forecasting a substantial price drop, which has occurred for the first time since 2022, a period marked by significant declines.
The decline of the three indices can be attributed to two main factors. Firstly, there are rising concerns about a slowdown in the AI sector, a pivotal driver of the stock market’s previous surge. For example, the declining demand for data centres has compelled Microsoft to halt certain data centre initiatives.
Moreover, escalation in trade tensions is evident, particularly between the US and China, targeting crucial industries. China has requested Boeing to postpone aircraft acquisitions, whereas the US has imposed restrictions on advanced chip sales from companies such as NVIDIA and AMD.
Due to these compounding challenges, it is anticipated that the major indices will be under downward pressure until the Federal Reserve indicates a propensity to intervene. They are also likely to remain pressured until US and Chinese officials complete their discussions. In the interim, Bitcoin is on a trajectory to affirm its status as a more secure investment amid ongoing economic and geopolitical uncertainties, thereby emerging as a preferable safe haven asset.
