Bitcoin markets rallied just a bit on Tuesday to show signs of life again. The $40,000 level sits above and is essentially the middle of the overall consolidation area that the market is currently trading in. The $45,000 level above features not only the top of the range but also the 200-day EMA.
That is an area where I think we could go looking towards if we get some type of push higher in Bitcoin and crypto in general, but to be honest I do not know what would move this market in that direction other than simple consolidation. Signs of exhaustion near that area would be a nice selling opportunity, and it is not until we break above there that I think we could see the market really start to pick up momentum to go to the upside. At that point, I would suspect that the market would go looking towards the $50,000 level after that.
On the downside, the $35,000 level offers quite a bit of support, so if we were to break down below that level, then it opens up the possibility of a move to much lower levels. I would anticipate that the next target would be the $30,000 handle, which has a lot of psychology and historical action tied up into it. If we break down below there, then the bottom is going to fall out and it is likely that Bitcoin will drag the rest of crypto with it.
Keep in mind that monetary policy tightening and a lot of “risk-off behavior” around the world will continue to keep Bitcoin somewhat muted, because although it is considered to be “outside of the system”, there have been a lot of examples of how it truly is not, and the bigger that it gets, the more likely it is to become more mainstream. Furthermore, Joe Biden is set to sign an executive order sometime in the next week that will have ramifications on the crypto markets, although we do not know truly what that order is going to be. It looks as if the governments are coming to regulate Bitcoin at this point in time, so more likely than not we will start to see Bitcoin behave like the stock markets or other places where a lot of money comes into a regulated situation.
