Bitcoin Surges 5% to $118,400 as US Stock Market Rises

Bitcoin (BTC) has surged to an unprecedented high of $118,400, marking a significant milestone in its price trajectory. This surge is part of a broader bullish trend that has seen the cryptocurrency break out of its bull flag pattern, indicating strong upward momentum. The price has already surpassed its previous all-time high of $112,000 and shows no signs of slowing down, with analysts predicting that it could reach $130,000 in the near future.

The current upward trend in Bitcoin's price is supported by a concurrent rise in the US stock market, as indicated by the S&P 500 index. The S&P 500 has shown a remarkable V-shaped recovery since early 2023, and its continued ascent is seen as a positive indicator for Bitcoin. Historically, a rising US stock market has coincided with similar price movements in Bitcoin, suggesting that the current bullish trend in the cryptocurrency market may be sustained.

Despite the impressive gains, there are indications that the current upward momentum may be temporary. The price of Bitcoin has experienced a slight retracement into the $117,000s, which could be a sign of a temporary pause before the next leg up. However, it is also possible that the price could start to decline in the coming days, as the momentum indicators are currently overbought. This would provide an opportunity for the price to consolidate and reset, allowing for a more sustainable upward trend in the future.

While the current price action is bullish, it is important to consider potential downside scenarios. According to the Fibonacci extension levels, the deepest retracement that could be reasonably expected is to the 0.618 level, which coincides with the top corner of the bull flag. This level could act as a support level in the event of a price correction. Additionally, the RSI indicator line has just crossed into overbought territory on the daily time frame, and it will need to get above 78.60 in order to avoid bearish divergence on this time frame.

On the weekly time frame, the RSI indicator line is approaching a descending trendline, which could act as a rejection point for the bulls. If the price does break through this trendline, it will need to confirm and then get above 88.40 in order to fully annul bearish divergence on this time frame. This would provide further support for the current bullish trend and suggest that the price could continue to climb in the coming weeks.