The Bitcoin market initially rallied on Tuesday to test the 200 day EMA but has turned around quite drastically to form a less-than-impressive candlestick. Because of this, we could get a significant pullback, perhaps reaching towards the $40,000 level. The $40,000 level is a large, round, psychologically significant figure, and it could cause a little bit of support. At this point, I think it is probably going to be a little bit of a target in the short term, and I would anticipate that there are probably some people out there looking to pick it up near that level.
That being said, we are not in the right economic circumstance to think that crypto markets are suddenly going to take off. We are in a very risk-averse attitude overall, and although we get the occasional bounce like we have just seen, crypto desperately needs a lot of risk appetite to get going to the upside. While I do think that Bitcoin eventually will go much higher, the reality is that we are not out of the woods yet, and probably have a lot of work to do in order to send this market higher. I think there is much more concern out there than there is optimism, so you have plenty of time to build up any Bitcoin position.
Speaking of this, it is worth noting that the 200 day EMA attracts a lot of interest, but beyond that the fears of inflation will. I know that some people will believe that cryptocurrency is a place to protect your wealth, but the last couple of months have shown yet again that is not the case. Crypto is a risk asset, and it is not a way to get away from financial concerns. It is difficult to move it around and turn into something you can use on a daily basis, such as the US dollar and the euro without multiple steps, and then a lot of the money that has flown into crypto over the last several months has been institutional, meaning that they will not hesitate to dump it in order to either take profits or perhaps more importantly, protect the bottom line.
