The Bitcoin market has initially tried to rally on Tuesday but gave back the gains to form a little bit of a shooting star. Ultimately, I think this is a market that will eventually find buyers though, and I think we are simply just running into a little bit of exhaustion as the market had reached an all-time high during the day. Forming the shooting star is a very negative sign, but I think at this point it suggests that we are simply looking for a pullback that could offer a little bit of value. After all, we had recently broken out above a bullish flag, which suggests that we have much further to go.
When you look at the bullish flag set up, it suggests that we are going to go looking towards the $85,000 level, based upon the “measured move” of the flagpole. The 50-day EMA sits just above the $55,000 level, and now looks as if it is going to continue going higher, perhaps reaching towards the $60,000 level. The 50-day EMA offers a certain amount of support, at least from a technical trader standpoint.
From a longer-term perspective, there is still a significant amount of money flowing into the Bitcoin market, especially as the ETF market now offers the possibility of getting involved in Bitcoin. With all of that money flowing into the crypto markets, Bitcoin is just the harbinger of what is to come for many of the other major currencies. Beyond that, we have a lot of concern about inflation out there, and Bitcoin has been recently used for a way to get away from that. Ultimately, this is a market that has no real fundamental reason to fall, but even if it did, there are enough holders out there that they would get involved in order to pick up value if and when it shows up. With this, Bitcoin is one of those rare markets that you are either long of, or on the sidelines. At this point, I might be a little bit on the sidelines but willing to buy some type of pullback that offers plenty of value on a supportive daily candlestick. On the other hand, if we were to break above the top of the shooting star, that would just show that we are ready to continue the move higher with extreme momentum.
