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We have been going sideways for a while, but this looks a lot like the last time we were going sideways, just before we fell.
The Bitcoin market fell a bit on Friday as we continue to see bearish pressure. At this point, the $28,000 level underneath offers quite a bit of support, so if we were to break down below that level it’s likely that Bitcoin will fall apart, sending the market down to the $25,000 level, perhaps even down to the $20,000 level.
Notice that the market has been going sideways overall, as we have bounced around the $30,000 level. The most recent rally had reached the $32,500 level, where we had seen previous selling pressure. If we can break above there, then I think we could get a little bit of a squeeze to the upside, sending this market to the $35,000 level, possibly even the $37,500 level.
It’s not until Bitcoin breaks about the $40,000 level that you can make an argument for a trend change, and I just don’t see that happening. Crypto has been beaten up rather significantly over the last several months, as the US dollar has been strengthening and risk appetite has been eviscerated. At this point, it’s likely that we will continue to see a lot of noisy behavior, but I think that any rally at this point in time will find enough exhaustion that you can start shorting again. Bitcoin has a long way to go before it turns around to show a longer-term move to the upside, and now it looks to me like we probably break down even further.
The $30,000 level is a bit of a magnet but at this point, it looks like the sellers are starting to get a little bit more aggressive as we have seen the most recent rally smashed. A lot of that was probably marking up into the end of the month, which is something that is illegal in normal markets. At this point, it’s very unlikely that crypto suddenly turns around for any bigger move, as risk appetite is absolutely destroyed. The market will continue to see a lot of volatility, and volatility quite often will keep big money out of the market. Until the Federal Reserve changes its overall tune, I just don’t see how Bitcoin outperforms the US dollar anytime soon. We have been going sideways for a while, but this looks a lot like the last time we were going sideways, just before we fell.
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