Bitcoin markets fell a bit on Monday but found buyers underneath to continue to push the issue for stability. Bitcoin is a risk asset, and it appears that there is at least an attempt to go back towards a “risk on” attitude during the trading session on Monday. This could change very quickly, but so far it looks like the buyers are trying to step in and pick everything back up. If that is going to be the case, then Bitcoin should be one of the beneficiaries as it had been beaten down so hard over the last several months.
Ultimately, I do think that this is a market just begging for some type of fundamental reason to take off, and I do think that it eventually will get it. The question is whether or not it can get it now? I do not necessarily know, but I do recognize that a break above the 200 day EMA at the $45,540 level would be an excellent start. At that point, I would anticipate that the markets would go looking towards the $50,000 level which would attract a lot of headline attention. It would obviously be a huge fight from that point on.
To the downside, if we were to crack below the $40,000 level, it would be a psychologically damaging situation for the Bitcoin markets, and I would not be overly surprised to see them race towards the $35,000 level underneath. Granted, we have stabilized a bit during the day on Monday, but this is still a very real threat. Remember, if we get some type of massive selloff in risk appetite, Bitcoin and crypto in general will be one of the first places they start pulling money from. I believe at this juncture we are looking at the potential for a lot of volatility, so if you are a longer-term holder you need to keep that in mind. If you are a shorter-term trader, then you need to cut your position size down as you could be shaken out rather quickly of a position based upon the potential explosion in either direction that we have right now. So far, things look good. However, that could also change at the drop of a hat in this type of environment.
