Bitcoin is holding its intraday gains above $9,100 on Thursday.But the cryptocurrency risks downside correction as the U.S. futures hint at a shaky start after New York opening bell Thursday.The unsteadiness surfaced as China approved a proposal for a national security law in Hong Kong, raising possibilities of a new geopolitical conflict with the U.S.Bitcoin was trading steadily above $9,100 on Thursday but risked breaking below the level as it heads into the U.S. trade session.The downside sentiment grew stronger as traders failed to push the intraday rally above $9,300. Bitcoin slipped 1.07 percent from its midnight local top at $9,289, signifying bulls’ absenteeism near the area. Ahead of the European market open, the cryptocurrency was changing hands for as low as $9,112.BTCUSD trending higher but in a bearish Rising Wedge pattern | Source: TradingView.com, CoinbaseThe bitcoin price rallied yesterday only hours ahead of Goldman Sachs’ client meeting about the cryptocurrency. Traders anticipated that the banking giant would support Bitcoin’s growing presence on Wall Street.Nevertheless, Goldman Sachs criticized the benchmark cryptocurrency, telling clients that it does not offer any protection against inflation. The pessimistic statements may have reduced bitcoin’s price explosion above $9,100 into a cracker.U.S. FuturesMeanwhile, Bitcoin avoided aggressive intraday corrections as traders received mixed trend signals from the U.S. futures.After closing higher to pre-March levels, the U.S. equity futures pared gains, with the benchmark S&P 500 hinting to open 0.1 percent lower on Thursday. Futures linked to the Nasdaq Composite also fell 0.66 percent, while that of the Dow Jones suggested a 0.18 percent advance.Wall Street futures performance | Source: CNBC Pre-marketsMichael Drummey, the U.S. equity risk trading head at Mizuho Americas, noted that the U.S. stocks underwent a FOMO rally – a fear of missing out” earlier this week. He asserted that investors who missed out on the post-March rally are buying equities in frustration as the U.S. economy reopens.Meanwhile, Mr. Drummey warned that the stocks are now under risk of “reasonably sized pullback” as artificially inflated companies stare at potential bankruptcies. He also cited uncertainties arising from growing conflicts between the U.S. and China that may affect the stock market uptrend.
China’s parliament on Wednesday voted in favor of a new security law for Hong Kong. The new rules aimed at curbing the rising anti-China, pro-democracy protests in the former British territory. Now their validation could provoke more reactions from President Donald Trump.
The new law pushed Chinese yuan to a low of 7.1556 against the U.S. dollar.
Bitcoin in Wait-and-Watch Mood
Bitcoin has historically behaved like a safe-haven in times of recent U.S.-China conflicts. But its growing correlation with the U.S. stocks amid the ongoing financial crisis increases its risks of tailing the macro trend.
So it appears, institutional investors’ increasing exposure in the bitcoin market allows them to sell their crypto positions to cover their losses in other markets. A similar sentiment was instrumental in crashing the cryptocurrency by more than 60 percent in March 2020.
Bitcoin now holds above $9,100 but remains in a broader bearish correction. The cryptocurrency’s failure to close above crucial resistances between $9,300 and $10,000 further raises its possibilities of extending the prevailing downtrend.
So, if the U.S. stocks react negatively to the U.S.-China conflict, then it means bitcoin could do the same.