Bitcoin has been falling for months. While the Nasdaq turned down to start this year, the Crypto market actually peaked out before Thanksgiving and fell much more than the Nasdaq and S&P 500 did in January and February. By the end of March, the US stock market finally rallied, but that rally faltered last week and has signaled a coming price disaster for Bitcoin and crypto.
The problem is that when the stock market rallied Bitcoin barely took back any of its earlier losses. You can see this from this chart with the Bitcoin/$SPX relative strength plot on the bottom of it.
While Bitcoin did rally from $35,000 to $47,500 its relative strength plot just went sideways, showing that Bitcoin was not able to deliver any relative strength improvement at all with the S&P 500 during the stock market rally.
In other words it continued to act as laggard in the financial markets even while it rallied.
When something lags like this when the stock market has another correction or downtrend it typically falls even more than the stock market does.
There is no reason to hope that things will be different this time for Bitcoin, especially since historically Bitcoin and Crypto coins have always crashed whenever the S&P 500 has pulled back 20% or more.
In my view, the thing to do is to use the recent market rally to get out of things lagging the S&P 500 and buy those things that are displaying powerful relative strength.
If you want to beat the market you need to be buying the things beating the market. If you buy or hold on to laggards you end up being a stock market loser.
Winning now means thinking really hard about the commodity complex, gold, silver, and mining stocks as I talked about in the video I posted on the website yesterday, you can find below, if aren’t in them already.
Maybe you don’t like that idea, but if you are in Crypto – NOW IS THE TIME TO GET OUT!
All Bitcoin did is rally back up to its 150 and 200-day moving averages and stall out.
That is classic stage four bear market action.
-Mike
