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The market continues to look very ugly but at this point, the market clearly favors the downside more than anything else.
Bitcoin rallied a bit on Monday but then pulled back to show signs of exhaustion. Bitcoin seems to be lacking any real conviction, so I think we are more likely than not going to stay in this range, using the $20,000 level as a bit of an anchor for price. Bitcoin has struggled for a while, and the fact that we are going sideways is not necessarily a victory, but it’s the first sign of the market at least slowing down the panic.
We have seen this previously, at the $30,000 level. The market went sideways for some time but then broke down to lose yet another one-third of its value. The 50-day EMA is sitting at $27,000 and dropping rather significantly, so I think it will continue to offer a reasonable dynamic resistant barrier. The 50-day EMA is widely followed, so I think that in and of itself will probably attract attention.
If the market were to drop down below the $18,000 level, then it’s possible that Bitcoin could search for $16,000, followed by $12,000. $12,000 is my longer-term target unless something changes quite drastically. With the Federal Reserve looking to tighten its monetary policy going forward, it works against the whole “hedge against inflation” theory that a lot of Bitcoin maximalists had preached. Furthermore, we have seen a complete collapse almost as soon as the Fed tightened. Not only had the crypto market started following a downward trajectory before then, but it also only accelerated once the Federal Reserve jumped in.
If we do rally from here, the 50-day EMA will be the first major barrier to get through. After that, the $28,000 level is an area where we previously have seen a lot of noise at. The area between $28,000 and $32,000 was the previous “ledge” that the market had been important. If we were to break above the $32,000 level, that would be an extraordinarily bullish sign. However, that seems to be very unlikely to happen at this point unless the Federal Reserve changes its overall attitude. The market continues to look very ugly but at this point, the market clearly favors the downside more than anything else. As long as things stay the way they have, then it’s likely we will continue to drop from here.
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