The Bitcoin market initially fell on Monday, only to turn around and show a lack of follow-through. This is what is known as “Brownian motion”: when it is just motion for motion’s sake, and we are simply going nowhere. I think a lot of this comes down to the fact that there is the Federal Reserve meeting this week, and monetary policy will certainly have a huge effect on what people do as far as the risk spectrum is concerned.
I do not know that this is a major accumulation area, I think it is just the market taking a breather and trying to figure out where the longer-term trend is going to be. The 50 day EMA is currently sitting just below the $42,000 level and dropping. I think this will more than likely offer a little bit of dynamic resistance on any rally, not to mention the fact that the $40,000 level is an area that does tend to attract inflow. In other words, rallies are probably not to be believed until we get some type of major impulsive candlestick.
Bitcoin will continue to suffer as long as monetary policy is going to be tight, and now that we have so much in the way of institutional money flowing into the crypto markets, it is difficult to imagine the people are going to be jumping into a high-risk asset such as crypto when money is so tight. If there is a huge “risk-off” type of attitude around the markets, Bitcoin has way too much in the way of volatility to attract the bigger players.
If we break down below the $35,000 level, we will almost certainly go looking towards the $30,000 level. Anything underneath there could open up a flood of selling. On the upside, if we were to turn around and break above the $45,000 level, then it is likely that we will go looking towards the $50,000 level. In the meantime, we are simply bouncing around in the same rectangle we have been in since the beginning of the year, as the markets favor range-bound trading more than anything else at the moment. It is worth noting that once we break out of this rectangle, it could give us a much clearer picture as to whether or not we are going to turn around and go much higher, or if we are going to enter the possibility of “crypto winter.”
