- During the trading session on Tuesday, we saw Bitcoin do very little, as it initially tried to rally, only to turn around and show signs of weakness.
- All things being equal, this is a market that I think continues to look to the 50 Day EMA sitting above as a short-term barrier, but I think Bitcoin has much more to worry about that and the technical analysis.
At this point in time, it appears that most people are paying attention to the US government, trying to figure out what they are going to do about crypto. After all, the new administration is pro crypto, but that doesn’t necessarily mean that anything is going to happen. In fact, nothing has so far. That being said, it’s also worth noting that the administration has only been in power for roughly a month, and it’s difficult to imagine a scenario where crypto was its number one priority.
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Because of this, I think the market will remain in a bit of a holding pattern, not only due to the regulatory questions, but also the fact that the Federal Reserve looks like it’s going to remain tight for longer than originally anticipated, and that of course means that money won’t flow to higher risk assets as quickly. This is exactly what Bitcoin needs, because it was initially a result of “ultra loose monetary policy.” Now that we don’t have that, you will find that Bitcoin doesn’t behave as well.
Technical Analysis
The technical analysis is somewhat neutral at the moment, and I do think that we continue to bounce around between the $90,000 level on the bottom, which I think also extends down to the $88,000 level as support, and the $110,000 level above as a significant resistance barrier. I think most people right now are just looking at this as a potential consolidation pattern that they can take advantage of and continue to accumulate. In fact, I buy a little bit every time it dips, but I don’t get aggressively bullish at this point.
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