The US market has long lent support to the crypto market. On Monday, the S&P 500 index slipped 1.04% on the day to 41,88.44. As for S&P 500 index futures, the trading session also showed a decline, with futures dropping 0.99% to 4,183. On Tuesday, Asian traders continued to push the indices lower, pushing e-mini S&P 500 futures (ES ticker) down 0.69%, to 4,154. In the upshot, the Nasdaq shed 2.55%.
Investors launched record numbers of positions in commodities on the back of inflationary expectations. Money flows into the real economy and cyclical companies. The tech-heavy Nasdaq Composite has been piling up losses as the sell-off in tech names shifts into high gear.
Note that when ES futures began to fall, the crypto market experienced an upsurge in selling activity. The crypto bears were apparently confident that they would be able to activate stop losses to cover long positions. Over the past 24 hours, eight crypto currency exchanges have triggered $1.5 bln in liquidity, $397.5 mln of which was in bitcoin.
The BTCUSDT pair dropped to $53,400. By the time of writing, the price action recovered to $55,650 and continues to trade in the $52,500-59,650 range. That said, the technical picture still remains on the buy side. Another leg up to $67,500 is still expected before a correction sets in across the board. However, if quotes collapse below $47,000 the bullish trend would be broken for a couple of quarters.
Bottom line: the decline in US indices exerted a negative impact on the crypto market. As a result, the BTCUSDT pair dropped to $53,400. Buyers managed to push the price action back up to $55,650. Bitcoin has been hovering around the $56,500 level for a long time. In our view, the market looks set for a new Bitcoin rally to $67,500. If buyers muster a breakout easily, the next target will be $77,500.