Bitcoin markets rallied a bit on Friday to test the crucial $45,000 level. We also tested the 200-day EMA, so the market certainly looks as if it is banging on the door of a breakout. If it can break above there, it will more likely than not drag the rest of the crypto markets with it, allowing for the possibility of all crypto to advance.
If Bitcoin breaks above the $45,000 level, it is also very likely that it will go looking towards the $50,000 level, which is a large, round, psychologically significant figure. The $50,000 level is an area that will continue to see a lot of interest, but we have broken through a couple of times and in both directions. Because of this, it is likely that the market will only pay so much attention to it.
Ultimately, this is a market that is trying to decide whether or not it is going to continue with the momentum to the upside. If it does not, it is likely that we will go towards the $42,000 level, where we had seen the 50-day EMA. The market breaking down below there then opens up the possibility of going down to the $40,000 level. At this juncture, I think that would not necessarily be the beginning of the end, it would just be the market returning to its consolidation.
If we see this market break down below the $37,000 level, then it is likely that Bitcoin could go to the $35,000 level. Anything below there would open up a massive selling opportunity, and perhaps a major breakdown as well. Ultimately, this market looks as if it is ready to break out, but it is not until we clear the $50,000 level on a daily close that I would be convinced is time to start putting money to work. After all, crypto is extraordinarily volatile and the markets seem to be nervous, to say the least, but you can also make an argument that we just formed a major bottoming pattern.
If this thing does kick off, it could be the end of the overall negativity and could lead to a bigger move to the upside. If you are a longer-term trader, you may get your signal in the next couple of days to start collecting again.
