Bearish pennant breakdown confirmed? 5 things to watch in Bitcoin this week

Bitcoin (BTC) starts a new week in a precarious place — below $45,000 and below some key moving averages. What's next？

Almost a week after a cascade of leveraged position unwinding forced the market to $42,800, Bitcoin has erased most of its subsequent recovery.

The weekend produced little by way of a paradigm shift, and now, downside volatility is firmly in place. With BTC/USD down 13% in a week, Cointelegraph takes a look at five things that may help traders to anticipate what the next move could be.

Stocks due for rebound

Stocks are expected to perform better this week after selling pressure added to Bitcoins woes in the first half of September.

With a red week behind them, expectations are that equities will now rally, continuing a trend which had characterized markets since the Coronavirus crash in March 2020.

“Expecting equities to bounce this week and provide some relief for Bitcoin,” Charles Edwards, CEO of investment manager Capriole, forecast.

Bitcoins overall relationship with macro trends has been increasingly called into question over the past year. Nonetheless, shocks to the system continue to influence BTC price action, as evidenced by the Federal Reserve Jackson Hole virtual summit earlier in September.

“The world still sees Bitcoin as a risk on asset,” Edwards added in comments alongside a comparative chart.

“Almost every Bitcoin correction in 2021 has correlated with a S&P500 correction of -2% or more.”

BTC/USD vs. S&P 500 annotated chart. Source: Charles Edwards/ Twitter

On the flipside, strong stocks may serve to keep the strength of the U.S. dollar in check, something which also gives Bitcoin more room to breathe.

The U.S. dollar currency index (DXY) saw a brisk move towards 93 last week before halting to consolidate its gains, a process which continues.

Spot price sags further below bullish metrics

Macro moves could be the deal breaker when it comes to this weeks BTC price trajectory, forecasts argue.

After ranging over the weekend, Sunday saw last-minute volatility which ended in BTC/USD slipping below $45,000.

With spot traders hedging their bets on more downside, there has arguably never been a bigger disparity between on-chain metrics, adoption phenomena, and price.

“Stablecoin liquidity increasing, bitcoin on exchanges hit a 3-year low, normies awaken,” Moskovski Capital CEO Lex Moskovski summarized.