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I think it is far too early to think that Bitcoin is going to turn around, and central banks around the world continue to tighten monetary policy.
The BTC/USD has bounced ever so slightly during the trading session on Monday to continue to test the $20,000 region. This is an area that obviously has a lot of psychology attached to it, but the reality is that the market will more likely than not continue to mess around in this area until we get some type of resolution.
If we break down below the last couple of days, then it’s possible that we could break down rather significantly. The market breaking down below that area opens to the possibility of a drop-down to the $15,000 level, and then eventually the $12,000 level. The $12,000 level is where the entire rally kicked off from, so would be a 100% retracement. You see that a lot in crypto it seems, so at this point, I still believe that is a very real threat, especially if risk appetite continues to be so poor.
At this point, we are testing the $20,000 level to see if it will hold as support. We have bounced all the way to roughly $24,000, before pulling back to this area. The 50-Day EMA sits below the $24,000 level and is dropping, so I think that will offer a little bit of dynamic resistance.
Monetary Policy Likely to Hinder Bitcoin
- I think it is far too early to think that Bitcoin is going to turn around, and central banks around the world continue to tighten monetary policy.
- It’s a bit ironic because I’m old enough to remember when Bitcoin was supposed to be completely independent of central banks, but that illusion has been shattered.
- If the US dollar strengthens and interest rates rise, that is horrible for Bitcoin.
In a word, Bitcoin is nothing special, it’s simply another commodity as far as traders are concerned. In fact, it has a very similar profile to other commodities, so you must trade it as such.
I think we do break down, especially as the US dollar has been like a wrecking ball. The US dollar is a little overextended so a little bit of a relief rally would not be completely out of the question. However, at the first signs of exhaustion, I suspect that I will be on my CFD platform looking to short this market. I would not get bullish until we broke over the $25,000 level at the very minimum.
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