Cryptocurrencies, Funds Move to S&P 500's New High... Will They Fall Again?

▲ Bitcoin (BTC), S&P 500/AI Generated Image

The cryptocurrency market declined, pushed down by the strength of the US stock market. After the S&P 500 hit an all-time high driven by a tech-led rally, funds within risk assets shifted to the stock market, and Bitcoin (Bitcoin, BTC) faced resistance at $82,838, leading to an overall market downturn.

According to cryptocurrency media outlet BeInCrypto on May 7 (local time), the cryptocurrency market fell by 0.59% that day. The total cryptocurrency market capitalization decreased from $2.66 trillion at the previous day's close to $2.65 trillion, with approximately $15.83 billion evaporating in a single day. The recent high was $2.72 trillion.

BeInCrypto analyzed that the S&P 500's new all-time high above 7,365 the previous day led to an outflow of funds from the cryptocurrency market. The strong performance of AMD in artificial intelligence (AI) and falling oil prices due to expectations of an Iran-related agreement drove the tech-centric rally, and risk-on funds shifted to AI-related stocks. The outlet reported that in recent weeks, a pattern of one day seeing stocks strengthen and another day seeing cryptocurrencies strengthen has been repeated.

The total cryptocurrency market capitalization is currently hovering around $2.65 trillion. BeInCrypto presented $2.60 trillion as an immediate test level that buying pressure must defend. This range corresponds to the Fibonacci 23.6% support line. If the market capitalization falls below $2.60 trillion, a downward path to $2.53 trillion and $2.47 trillion could open. Conversely, if it surpasses $2.72 trillion, a broader uptrend could be reactivated, according to the analysis.

Bitcoin retreated from $82,838 on this day. BeInCrypto reported that a hidden bearish divergence appeared on the daily chart. From January 5 to May 6, Bitcoin's price made lower highs, but the Relative Strength Index formed higher highs. The outlet explained that this pattern suggests a continuation of a larger downtrend rather than a reversal of the recent rebound.

Bitcoin was trading at $80,925 at the time of writing, down 0.63% on a daily basis. The immediate resistance level was set at $82,820, where resistance was previously confirmed. In case of further decline, the first support level is $77,423, followed by $74,084, $71,385, and $68,686, respectively. Conversely, if the daily closing price surpasses $82,820, the bearish divergence could be invalidated, and a further upward path could open.

Pudgy Penguins (PENGU) fell approximately 6% over 24 hours, trading at $0.0104. However, BeInCrypto analyzed that there is a possibility of a bull flag pattern based on the chart structure. PENGU recently rose 97% from $0.0060 to $0.0118 and is now forming a flag-shaped correction. If it breaks above the upper trendline, a potential upside of approximately 100% could be presented.

In the short term, PENGU needs to clearly surpass $0.0104, and a breakthrough is confirmed if it breaks above $0.0113. Downside support levels are presented at $0.0096 and $0.0082. If it falls below $0.0082, the pattern's reliability could weaken, leading to a decline of about 20% from the current level.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*