Bitcoin’s big week continues. At time of publishing, the king of crypto is at $7,554, up 1.37% in the last 24 hours, according to CoinMarketCap.
BTC hit a low of $6,843 on Monday and rallied throughout the week while the Dow Jones and S&P 500 remained flat, closing on Friday at almost exactly the same levels as at the start of the week.
Sideways trading in the stock market comes as the US Federal Reserve’s balance sheet hits a record $6.6 trillion, with the central bank purchasing securities and other assets at a blistering pace in a push to buoy the markets.
As Bitcoin flirts with resistance in the upper $7,500 range, trader and crypto analyst Scott Melker says he’s buyer and is now looking to see how the correlation between the crypto market and traditional markets holds up.
“If Bitcoin and SPX correlation can be defined as ‘both go up, then SPX goes back down and BTC stays up,’ then yes, I’m fine considering them being ‘correlated.'”
Melker cautions that if another large move to the downside rocks traditional markets, BTC is likely to once again follow.
Amid the extremely shaky and volatile global economy, he also has a message for Bitcoin believers. He says anyone trying to day trade BTC should probably give it a rest if they truly believe it’s heading for exponential growth in the long run.
“If you truly believe that Bitcoin is going to 100K, then you should just slowly buy it, regardless of price, and check your balance quarterly. No need to risk trading away your stack before it gets there. If you insist on trading, do it with 15% of your portfolio or less.
It is important to remember this simple fact – most people who have made money in markets have never looked at a chart. Most have never even heard of technical analysis. Investing > trading. It’s not even close. Even the most successful trader should be an investor first.”
Bitcoin is known for its extreme volatility, and traders of any cryptocurrency have to be prepared to lose it all. Bitcoin has plunged 85% or more several times throughout its market cycles, leading some financial advisors, including the founder of Edelman Financial Engines, Ric Edelman, to recommend that no one invest more than 1% of their portfolio in BTC.
Featured Image: Shutterstock/Tithi Luadthong