Bitcoin rallied rather significantly on Monday, as it looks like we are trying to break out of the consolidation area that we have been in. By breaking above the $23,000 level, the market will almost certainly take on a more bullish tone, at least in the short term. The 50-day EMA sits right around that region as well, so I think a lot of things are coming into the picture at the same time.
Whether or not we can break out is not necessarily the important question. The important question is if we have finally bottomed? I do not think that’s the case, but for a short-term trader, this may present an opportunity. The market breaking above the 50-day EMA should allow Bitcoin to go looking to reach the $25,000 level. Ultimately, this is a market that I think has been paying close attention to $20,000, and therefore I think we need to pay close attention to what happens in this general vicinity.
In other words, if this market was to pull back and fall towards a $20,000 level, it tells you just how little follow-through there is at the moment. Part of what we are seeing is a “knock-on effect” from what’s going on in Ethereum and the idea of The Merge coming, causing crypto to rally across the board. However, that is a short-term catalyst, and furthermore, it is a catalyst that has been delayed multiple times.
If we turn around and break down below the $18,000 level, I think that will allow Bitcoin to go looking to the $12,000 level for a potential base-building exercise. I think that the markets are still very vulnerable at this point, and even if we do get a bounce, it is more likely than not going to be one that should be thought of as a “bear market rally.” After all, the economic situation has not gotten any better, and Bitcoin is pretty far out on the risk spectrum to think that large money is going to go flowing into the market. This does not mean that we can’t get a bounce, just that I would anticipate we need to see the US dollar take a breather before the Bitcoin market can truly take off. In the meantime, this is a short-term trading opportunity.
Ready to trade Bitcoin in USD? We’ve shortlisted the best MT4 crypto brokers in the industry for you.