Bitcoin markets initially tried to rally during the course of the session on Wednesday but gave back quite a bit of the gains as the $40,000 level seems to be somewhat out of reach at the moment. By forming a shooting star shaped candlestick, the question now is whether or not the buyers can turn around and take out the top of the candlestick? This will be especially obvious if we can break above the $40,000 level and would kick this off into a “bullish market.”
The 50 day EMA has started to curl lower, from the $43,000 level and it looks like it is very quickly reaching towards this area. That being said, you can also make an argument for a double bottom just below near the $36,000 level, so with this being the case, I think we got a situation where we simply have a lot of noise ahead of ourselves. Keep in mind that Bitcoin is struggling at the hands of monetary policy tightening from the Federal Reserve, which takes a lot of risk out of the market. As long as that is going to be the case, it is going to be difficult to see this market rally for any significant move.
Underneath, if we were to break down below the $35,000 level, then it is likely that we could go looking towards the $30,000 level, something that I think is more likely than not at this point. If that level breaks down due to bearish pressure, then it is likely that we go looking towards the $20,000 level, and we could even enter what is known as “crypto winter”, when crypto does very little for a very long amount of time. That would not surprise me at all not only due to the monetary policy cycle, but crypto has gotten out of hand for a while. When you look around the world, there is no real use case of it yet. Beyond the whole “greater fool theory”, it is difficult to imagine why Bitcoin would suddenly take off without some type of mainstream adoption on a more daily basis. Until that is the case, Bitcoin is going to struggle unless there is a lot of risk appetite trading out there in general, which is not the case at the moment.
