- Bitcoin’s bullish divergence against the S&P 500 sparks debate over whether capital could return to crypto.
- Analysts watch Bitcoin’s momentum indicators as price weakness shows signs of slowing across markets.
- Market risks remain as investors await Fed signals while Bitcoin tests key support levels for recovery.
A potential signal in Bitcoin’s market behavior is drawing attention as investors look for clues about where money could move next. Analyst Pumponomics said he recently increased his crypto exposure after spotting a bullish divergence between Bitcoin and the S&P 500, a pattern he believes could indicate capital returning to digital assets.
Pumponomics said he had previously favored fast-growing sectors such as artificial intelligence, quantum computing, and space technology over cryptocurrencies. However, his view changed after he noticed similarities between today’s stock market leaders and past crypto market cycles.
He wrote, “the rotation is coming, and our coins are cheap here.” He also argued that if capital does move back into crypto, it is more likely to flow into a small group of established digital assets rather than the broader market of speculative tokens.
Source: X
Technical Signals Suggest Momentum May Shift
The analyst’s thesis centers on a chart comparing Bitcoin against the S&P 500. According to Pumponomics, a weekly bullish divergence has started forming. Although the signal remains unconfirmed, he noted that a similar divergence previously preceded an extended period of Bitcoin outperformance.
Related: Kevin Warsh Leads First Fed Meeting With Inflation Back Above 4%
Meanwhile, Bitcoin is trading below its earlier peak prices of 2025. Nevertheless, momentum indicators suggest a bullish bias.
Both the Relative Strength Index and MACD have formed higher lows while price trends lower. As a result, selling pressure may be weakening. Similar conditions appeared during Bitcoin’s 2022 market bottom before a broader recovery emerged.
Fed Decision and Market Risks Remain Key
Not all analysts are convinced that Bitcoin is ready for a sustained move higher. Trader Michaël van de Poppe said the cryptocurrency faces an important test in the coming days, with its ability to hold key support levels likely determining its next direction. He wrote on X that, “It’s all depending on the coming few days for #Bitcoin.” He also pointed to the importance of reclaiming the 21-day moving average.
Source: X
Van de Poppe noted that altcoins have recently shown signs of strength, a trend that could provide support for the broader crypto market. Still, he said Bitcoin needs further confirmation before a stronger recovery can be established.
Broader market risks also remain in focus. Arthur Hayes recently reduced his exposure to several major cryptocurrency positions, citing concerns over artificial intelligence valuations, geopolitical tensions, and global liquidity conditions.
At this stage, investors continue to assess the implications of the Federal Reserve’s latest policy decision. According to CoinMarketCap data, the total cryptocurrency market was valued at $2.23 trillion, while the Fear and Greed Index stood at 23, reflecting continued caution across the market.
Related: Bitcoin Price: Galaxy Says $43K Bottom While Standard Chartered Calls $59K the Low
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
