BTC Takes out 2017 Peak, Do Stocks Follow Lower?

Whether it bounces or not, the piercing of support tells me BTC will go lower eventually. The $15,500 area is long-term support. The line has never been broken. Next is the $13,826 line. At that point, BTC reverses all of the post-lockdown gains. Then $10,000 area is going to be supportive like $20,000 was...and then it goes back to test $3000.

Where BTC goes eventually isn't as pressing as where it goes this weekend and whether it remains a leading indicator for stocks. 

There are two paths forward for BTC. One is the breakdown outlined above. BTC plummets and the stock market follows it. 

The other scenario is an overthrow. When a major support line such as $20,000 is breached, it triggers a wave of selling by longs and new shorts. In certain conditions, such as exist now I'd argue, this can be the final step before a giant short-squeeze. The longs that sell are the last to sell until the next support level and new shorts will hold until the $20,000 area. If people are afraid to buy this dip, that would raise the odds that it is in fact an overthrow because sentiment has reached peak negativity.

The question for stocks is where does BTC sit at the open on Tuesday? If it keeps falling all weekend, that could set up a major decline in the financial markets. If instead BTC reverses hard, stocks may open higher even if BTC is still below $20,000.

As for the QQQ, it hit my target on Thursday and held on Friday.
This isn't a major support area, but the 38.2-percent retracement from the 2009 low to 2021 top is at $260, a 5.5 percent drop from Friday's close. If QQQ was trading and roughly matched the drop in BTC, it would have tagged that level. Long-term support is 12 percent lower from Friday's close. That is a sizable loss from here, but it will probably happen extremely fast as will the rally, meaning two weeks from now stocks might be right where they are today in that scenario.
My expectation is the low in stocks is already in or coming soon no matter how far the market drops, warranting a bullish bias in the short-term.

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