Bitcoin (BTC) price took a bullish turn on March 10 as the digital asset surged to $8,150 before encountering resistance, which saw the price temporarily pullback to $7,730.

The S&P 500 and Dow followed a similar trajectory by surging at the opening bell before pulling back sharply in the afternoon trading hours.

“Unfortunately, a downward trend for now”

Both indexes rallied into the close, possibly on the release of additional details about U.S. President Donald Trump’s proposal to shore up the US economy by extending relief funds to key industries, and a payroll tax to assist workers hurt by COVID-19’s negative impact on business.

The S&P 500 ended the day with a 5.17% gain and the Dow recovered more than half of it’s March 9 loss by rallying 1,167 points. Interestingly, Bitcoin price also made a second attempt at $8,000, topping out at $7,965 right around the time that U.S. markets closed.

Despite the strong performance, economist and Allianz chief economic officer Mohammed El-Erian told CNBC that:

“I don’t think we’ve made the lows yet, but it is going to be incredibly choppy.”

El-Erian elaborated by saying, “It’s going to be very volatile but around, unfortunately, a downward trend for now.”

El-Erian has also repeatedly cautioned investors against buying the current dips occurring within the market and the continued spread of the Coronavirus in Europe and the US is clearly weighing on investor sentiment.

Dow Futures, S&P 500 Futures, BTC USD daily chart. Source: TradingView

At the time of writing the Dow futures are down more than 450 points and the S&P 500 futures have dropped by 2%, suggesting Wednesday open will see the markets possibly drop sharply again.

Crypto market daily price chart. Source: Coin360

Bitcoin versus gold

Crypto investors subscribing to the belief that Bitcoin functions like a store of value and hedge against traditional market volatility are closely watching to see how the digital asset performs during the current correction.

BTC USD vs Gold. Source: Skew.com

For the past two weeks, the crypto asset has been in tandem with the price action of equities markets but data from Skew shows that Bitcoin returns are still up 9.45% in 2020 while the S&P 500 has dropped by 10.79%.

Macro Assets Current Yearly Returns (%) Source: Skew.com

For those who believe Bitcoin is “digital gold”, data shows the two assets out of sync on the monthly time frame but both Bitcoin and gold are up 9.45% and 8.82% in 2020. This suggests that regardless of the fact that Bitcoin price has dropped by 14.85% since March 7, some traders still view the asset as a hedge against volatility.

Unsurprisingly, staunch Bitcoin critic Peter Schiff seems to believe otherwise and he capitalized on Bitcoin’s recent poor performance by tweeting:

“Bitcoin is no longer a non-correlated asset. It's positively correlated to risk assets like equities, and negatively correlated to safe-haven assets like gold. When risk assets go down, Bitcoin goes down more. But when risk assets go up, Bitcoin goes up less. No value in that!”

Bullish short-term view

Currently, Bitcoin price is consolidating near the 61.8% Fibonacci retracement level ($7,978). As mentioned in a previous analysis, if the price can flip pull above $8,120 and flip the $8,200 resistance to support, the volume profile visible range (VPVR) suggests that the price could run as high as $8,600 by exploiting the volume gap from $8,100 to $8,600 before encountering resistance.

BTC USDT 6-hour chart. Source: TradingView

On the 6-hour timeframe, the moving average convergence divergence (MACD) histogram continues to rise closer to 0 as purchasing volume increases and Bitcoin forms higher lows.

Ultimately, bullish price action is going to be dependent upon purchasing volume and buyers are unlikely to pile into crypto until either traditional markets show sustained improvement or the Coronavirus loosens its stranglehold over Europe and the United States.

Bearish view

Although the MACD has flattened out and begun to curve up toward the signal line. The high volume VPVR nodes from $8,600 to $8,820 align with the descending trendline and barring a high volume breakout, Bitcoin is likely to struggle making a daily higher high above $8,750.

If the price were to rally to $8,500-$8,600, traders would likely open short positions at this level as they are aware of the overhead resistance and the fact that $8,500 has been a crucial price level for Bitcoin.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.