US stocks are beginning to correct due to pandemic concerns are mounting. Meanwhile, the Bitcoin (BTC) fell below USD 18,800 on December 8 after struggling to break the USD 19,500 resistance.

The daily Bitcoin (Coinbase) price chart. Source: TradingView

COVID-19 cases in the United States and Europe are constantly on the rise despite strict restrictions. Sweden, for example, which has hitherto relied on voluntary measures, has done so implemented a new set of restrictions.

Since October 30, the Dow Jones Industrial Average has risen 13.46% within six weeks. Other major US stock indexes, such as the S&P 500, also rose about 13%.

After a strong rally of six weeks, the call for a stock market correction comes into the picture. Some technical indicators localize an overheated stock market, which could negatively impact alternative assets such as Bitcoin in the short term.

Macro assurance coincides with BTC card techniques

Market analysts say Bitcoin is currently fighting a critical level that could dictate its price direction in the short term.

In general, analysts point out to the $ 19,500 to $ 19,600 range as the main resistance area for the foreseeable future. Above that, BTC has the potential to break a new record and continue the rally.

If Bitcoin falls below convincingly, traders expect somewhere between USD 14,000 and USD 18,000 for support range.

The timing of the growing uncertainty in the Bitcoin market is remarkable as it coincides with an ambivalent US stock market.

US equities have rallied in recent weeks, boosting sentiment for risky assets. But the recent slump of the S&P 500 during the after-hours trading session indicates that investors are becoming cautious. Holger Zschaepitz, market analyst at Welt, said:

“Global equities are under pressure as pandemic concerns outweigh hopes for stimulus measures. S&P 500 Futures decline in fear of restrictions as infections increase. Bonds held on to Mon’s earnings at 0.93% US interest. Dollar stable with Euro at $ 1.2120. Gold is trading higher at $ 1868. #Bitcoin at $ 19.1k. “

The primary source of fear and uncertainty stems from whether there is one more monetary stimulus package will arrive shortly. Despite the optimism surrounding vaccines, the second wave of lockdowns and economic restraints in both the US and Europe is putting pressure on market sentiment.

Bitcoin Rolling 90-Day Returns. Source: Digital Assets Data, Cointelegraph Markets

Bitcoin’s correlation with the S&P 500 and gold has been declining since October. Nevertheless, a decline in the stock markets is also likely to lead to a decline in the BTC and gold price, at least initially, as in March.

Crypto Fear and Greed Index. Source: Digital Assets Data, Alternative.me

Such as Cointelegraph reportedAnother variable to consider is the moderate volume in the Bitcoin market amid record levels of “extreme greed,” based on the Crypto Fear and Greed Index. BTC’s daily trading volume is on a downward trend compared to previous weeks, which also indicates an increased degree of caution in the market.

JPMorgan’s optimistic stance is a variable

While short-term sentiment around risky assets is waning, JPMorgan says the market is still in the midst of an upward trend.

According to Business Insider, JPMorgan strategists explained that trading “long stocks” is overcrowded and that there is a correction for January. However, the strategists emphasized that any correction in the stock market would be an opportunity to buy. They said:

“So any short-term equity correction would represent a buying opportunity, as we believe we are only in the middle of the current bull market.”