Bitcoin Price Forecast: BTC/USD settles above daily SMA50, still vulnerable to losses in the short run

BTC/USD is not correlated to stocks or any other assets, trader says.
BTC/USD passed an important barrier, more hurdles ahead.

Bitcoin correlation to stock markets is one of the most popular topics in the cryptocurrency community. This parameter is often viewed as an answer to the question of whether BTC is a risky asset or a safe-haven where traders can park their wealth while the market is volatile and unpredictable. According to a popular crypto-twitter analyst Scott Melker, aka The Wolf Of All Streets, the first digital currency is not correlated to stocks and has a distinct line of its own. He posted a series of tweets where he explained his point.

Stocks and Bitcoin have had similar price movements at times over the past few weeks, but they are not correlated assets.

He explained that Bitcoin also often moved in unison with other assets like gold and even oil, which cannot be taken as a proof of its correlation with them. Melker believes that stock markets cannot be used as a reliable indicator of Bitcoin's price as the cryptocurrency market follows its own way.

This is the very reason that all investors should hold some Bitcoin - it offers idiosyncratic risk rather than systematic risk like other assets. Even if it is a RISKIER asset, having it in a portfolio reduces overall portfolio risk due to this lack of correlation.

BTC/USD: technical picture

At the time of writing, BTC/USD is changing hands at $7,070, with over 4% of day-to-day gains. The first digital asset has settled above psychological $7,000; however, the further upside is limited by the next strong resistance $7,150. This barrier is created by a combination of strong technical indicators, including the previous recovery high and 50% Fibo retracement for the downside move from February high. Once it is out of the way, the upside is likely to gain traction with the next focus on $7,500.

On the downside, the support is created by daily SMA50 (currently at $6,970). This line limited the recovery since the beginning of April, thus a sustainable move higher bodes well for BTC bulls; however, if they fail to hold the ground, the sell-off may be extended towards support area $6,500-$6,400, which includes the lowest levels of the previous two days and 38.2% Fibo retracement for the above-said movement.

BTC/USD daily chart

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