The Bitcoin market sold off rather drastically during the trading session again on Friday, although not as bad as it did on Thursday. This was the same story, with Chinese regulators coming out and suggesting that they were going to try to ban the use of crypto. Because of this, the market sold off rather drastically, crashing through the $40,000 level again. The market is sitting at the 200-day EMA as I write this, so it does make sense that the longer-term traders are paying close attention.
Take a look at the candlestick from the Wednesday session, and you can see that the market crashed through the 200-day EMA but did find support at $30,000 to turn around and rise above it again. That being said, if we turn around and reclaim to the downside, it is very likely that the next serious battlefield will be at the $30,000 level. That obviously is a large, round, psychologically significant figure, and an area where we have seen action previously. Breaking down below that level would be very bearish, and perhaps send Bitcoin as low as $20,000 rather quickly.
To the upside, if we can take out the highs of both Thursday and Friday, the market might go looking towards the $50,000 level again, but I think a lot of damage has been done to this market and leveraged players continue to be forced into liquidation. At the very best that I can see, we probably need to go sideways for a while in order to calm things down. The Thursday candlestick was the first sign of that, but we cannot stay up here, so it is likely that we will continue to see downward pressure. I believe at this point Bitcoin is getting rid of all of the excess that had clearly been in the market, and longer term this is probably a good thing.
As things stand right now, I would be very hesitant to put money in the market. While I continue to read forums full of people saying that they are “buying more and more”, I think they may be a little disappointed in how this market behaves. It would need to see a complete shift in order to be a buyable asset right now. I do believe that at best, we are going to go sideways, and most likely we are going lower.
