- The BTC/USD market has pulled back just a bit during the trading session on Monday, as we are starting to see more of a hesitant market for Bitcoin, and therefore we could see this market drop down rather drastically.
- After all, we had shot straight up in the air, and we now look at the $25,000 level above as a potentially significant barrier.
- This is an area where we had seen a lot of selling pressure previously, and it looks as if it could be the top of a massive consolidation area.
The 200-Day EMA is closer to the $21,000 level, and I think we make looking to reach there. After all, this is a market that faces a major headwind this week, which of course is the Federal Reserve meeting on Wednesday, and of course the press conference afterward. We expect to see an interest rate hike, but what comes next will be the press conference, and that could give us a bit of a “heads up” as to what monetary policy is going to be. If the Federal Reserve is going to remain extraordinarily tight, that will probably be damaging to the prospects of Bitcoin.
We Are a Little bit Stretched
After all, Bitcoin tends to do well when there’s loose monetary policy, as we have seen all of the previous theories get destroyed. It’s not a store of wealth, it’s not money, it’s not digital gold, it’s a speculative asset. It’s a way to protect wealth against losing money. It seems to have a direct negative correlation to Federal Reserve monetary policy, so it’s not until the Federal Reserve changes its overall policy that you would expect Bitcoin to really take off. Most of what you have seen over the last couple of months have been people betting that the Federal Reserve is going to step away from its aggressive policy.
The one thing that it really does have working for it from a fundamental standpoint is the fact that even with the seizures, frauds, and bankruptcies in the cryptocurrency world, Bitcoin has not sold off further. That’s a sign that at least people are starting to differentiate the Bitcoin market from the crypto world. Looking at this chart, it’s obvious that we are a little bit stretched, and I do think that the $25,000 level will be difficult to break above. If we did though, that would obviously be very strong.
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