Stocks, Greed and Exuberance: 5 Things to Watch in Bitcoin This Week

Bitcoin (BTC) begins Monday by avoiding another test of $9,000, but what could happen to change the mood or even set off a bull run?

Cointelegraph takes a look at five major facts that could influence the BTC price during the coming week. 

Stocks under pressure: does “valuation” matter?

The macro outlook seemed more or less stable on Monday. Prior to trading, futures for the Dow Jones, S&P 500 and more were modestly up, despite concerns mounting over coronavirus.

Specifically, one source quoted by Bloomberg warned on Sunday, the sentiment is one of worry — both about the spread of cases and the United States’ response to protect the economy. 

If the Federal Reserve intervenes in equities yet again and adds to its balance sheet, it would increase the sense of an artificial presence on the markets in terms of competition.

“There is an emerging possibility that the Fed hasn’t gone far enough,” quantitative strategists at Sanford C. Bernstein wrote in a note.

“If that came to pass, then maybe valuation of the market simply doesn’t matter.”

Fed balance sheet as of July 7. Source: Federal Reserve

As Cointelegraph reported, Bitcoin has shown no signs of lessening its dependence on stocks in recent weeks. Moves up or down appeared to shape BTC/USD performance, with last week’s trip from $9,000 to near $9,500 and back down again being no exception.

Analysts particularly eye the S&P 500, an index with which Bitcoin currently shows a 95% correlation. 

Coronavirus is also weighing on U.S. consumer confidence, fresh data meanwhile shows, with five indicators all flashing bearish in July after recovering during the two previous months.

A tale of two Fear & Greed indices

On the topic of macro, trader sentiment in cryptocurrency still contrasts with that of traditional markets.

That was the conclusion from two incarnations of the Fear & Greed Index, a basket of factors designed to show whether traders are overly risk-off or unduly confident.

The Crypto Fear & Greed Index remains in the “fear” category with little movement for several weeks. By contrast, the traditional market equivalent is flashing “greed,” while slowly trending downwards towards “neutral.”

On a scale of 1 to 100, Monday scored 59, down 7 points from the same time one month ago. The cryptocurrency equivalent measured 43 for Monday and 38 last month.

Fuelling traditional “greed” was “extreme greed” in stock price breadth, while derivatives put and call options, along with safe-haven demand, also sat firmly in the “greed” range.

Crypto Fear & Greed Index 1-month chart. Source: Alternative.me

Cash, gold inflows beat stocks in 2020

The greed narrative fits with other signs that stocks, in particular, are overly buoyant. 

As noted by market commentator Holger Zschaepitz on Monday, the correlation between the Nasdaq and S&P 500 is on the up, in what he describes as a “sign of exuberance.”

At the same time, banks are gearing up for a dismal quarterly performance,…