- The BTC/USD did almost nothing during the day on Wednesday as we continue to see a lot of noisy behavior overall.
- The $20,000 level seems to be of interest, and a lot of traders will continue to look at it through the prism of a “big round number.”
- There’s a lot of psychology in these areas, and it is worth noting that the headline noise alone will have people interested.
- There is a lot of support underneath there all the way down to the $18,000 level.
If you break down below the $18,000 level, and I believe we will, it’s very likely that Bitcoin gets crushed. In that environment, it’s difficult to imagine how anyone could be excited about owning this asset. This is a very “risk off” type of situation we find the world in right now, bitcoin needs the Federal Reserve to come in and save it, via flooding the market with liquidity. It’s a bit ironic, considering Bitcoin desperately needs the central bank to lift it. It has become everything that it didn’t want to be, which has been an interesting thing to watch over the last couple of years. Nonetheless, it is a tradable instrument, and we just deal with the market we are dealt with. Over the longer term, I do believe that we are going to break down quite significantly, perhaps down to the $12,000 level.
Bears Likely to Continue to Dominate the Market
If the Federal Reserve remains tight with its monetary policy, it takes away one of the main reasons for Bitcoin to rally. After all, it’s not a hedge against money printing if we are in fact tightening monetary policy. As long that’s going to be the case, then I just don’t see how Bitcoin takes off. In fact, it needs a break above the $25,000 level at the very least for me to consider that something has changed. Beyond that, the fundamentals just don’t line up, and I think Bitcoin is probably going to be dead money for a while.
Longer term, I would love to see Bitcoin drop to the $12,000 level, because I think in that general vicinity you can start to accumulate for a longer-term “buy-and-hold” type of position yet again as the market has proven itself to be susceptible to multiple times in the past.
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