Bitcoin rallied rather significantly on Friday to break through the $40,000 level. This is a psychological win and could bring more people back into the markets. If that is going to be the case, I think it is only a matter of time before Bitcoin continues to go looking towards the $42,000 level, and breaking above that could in fact signify that we are trying to change the overall trend.
Quite frankly, Bitcoin sold off so drastically that I think it is a situation in which we are going to see a little bit of hesitation to jump “all in”, but there is a lot of institutional money in Bitcoin these days, so they will look at it through the prism of it being “undervalued.” Whether or not that is true is a completely different question, and one that I am not interested in. The reality is that if the market takes out the $42,000 level, I believe that we have a real shot at rallying.
In the short term, we could see the occasional pullback, but it is worth noting that we have a relatively strong candlestick during the session on Friday, with a little bit of a lift in volume. The $35,000 level underneath is trying to offer support, but if we break down below there then I think it is likely that we could go looking towards the $30,000 level. That is the absolute “floor in the market” from what I see. Breaking down below there then opens up the possibility of a “crypto winter”, which could last for several months, if not a couple of years. There has been a lot of psychological damage done to the uptrend, so even if we do simply take off to the upside, it is probably going to be a longer-term affair, so I am looking to buy dips as things stand at the moment. I have started to put a little bit in here and there in order to build a position back up, as I think ultimately Bitcoin will continue to be bullish long term, but in the short term you need to be very cautious. This could be a very dangerous place to be if you are not careful. If the US dollar spikes again, that should send Bitcoin right back down. In an odd perverse sense, you can make an argument that the European Central Bank has been the savior of crypto.
