Bitcoin tests $40K as crypto tracks US stocks

• Bitcoin has gained 2.5% in the past 24 hours and is trading near the immediate resistance level of $40k

• Ethereum’s bounce has seen it touch intraday highs near $3,000.

• S&P 500 was up 2.3% in afternoon trading on Thursday.

Last Friday, Bitcoin price dropped by more than 5% US indexes plummeted, with the correlation continuing throughout this week. Today, crypto is looking to mirror gains across stock markets again, with Wall Street’s sharp climb after opening higher likely to provide further impetus.

Bitcoin (BTC) and Ethereum (ETH), the ‘big boys’ of the crypto market with a combined market capitalisation of nearly $1.2 trillion (the total crypto market capitalisation is $1.9 trillion at the time of writing), have bounced more than 2% in the past 24 hours.

The BTC/USD pair is hovering above $40,000 while ETH/USD is close to the $3,000 resistance level, with both coins gaining amid a broader recovery in equities.

In the equity markets, the S&P 500 is up 2.3%, the Dow Jones Industrial Average is higher by 1.7% and the Nasdaq Composite is leading the upside with 2.8%. There were also green sessions for Asian and European stocks, just days before the US Federal Reserve’s 0.5% interest rate hike.

Bitcoin and Ethereum are still “bullish”

BTC/USD holding well to support levels above $38K and retesting the key supply wall at $40,000 suggest bulls still have a chance to push higher.

 According to the pseudonymous crypto trader and analyst Altcoin Sherpa, the market structure looks bullish. He noted earlier in the day:

“As long as these lows are maintained and we still see higher lows, I think the bullish market structure is still intact. Still thinking 55k+ in the coming weeks.”

Rekt Capital, one of the top Bitcoin analysts on Crypto Twitter, also thinks Bitcoin could go higher.

“Bullish Divergence on the 4-hourly is playing out. Key resistance in the very short-term will be this red area [above $40,300]. Turning it into support like in the previous yellow circle would be a bullish sign for trend continuation,” the analyst shared.

Chart showing BTC price on the 4-hour timeframe. Source: Rekt Capital

On Ethereum, Altcoin Sherpa says:

“Unlike $BTC, ETH is still decently above its last lows and still has a bullish market structure (btc does too but its closer). Would like to see a higher low formed for #Ethereum. I think that it’s still at the mercy of BTC though, as always – if BTC tanks, so will ETH.”