There’s no realistic scenario in which I am a buyer as things stand currently.

Bitcoin had a relatively quiet session on Wednesday as we are hanging just above the $20,000 level, an area that of course is a large, round, psychologically significant figure. The market breaking down below that level could open up quite a bit of fresh selling pressure and kick off the next leg lower. Ultimately, if we break down below the $18,000 level, this thing could start falling apart yet again.

Keep in mind that there is a line of downward pressure to begin with, and if we were to break down below the $1800 level, the market will probably try to pick up the $16,000 level, possibly even lower than that. From a longer-term standpoint, the technical analysis suggests that we could drop to the $12,000 level. The $12,000 level is an area that is important from the past breakout, and it was where we kicked off this bullish run that the market is currently destroying.

Looking at this chart, it’s obvious that we are very much in a downtrend, and it would be difficult to see this as a bullish setup unless we clear the $30,000 region. That essentially means we need to gain 50% before we can even start to talk about Bitcoin being remotely bullish. With the tightening monetary policy in the United States and the fact that everything is being sold off currently, I just don’t see how a risk asset such as Bitcoin attracts a lot of inflow. The Bitcoin market will continue to be noisy, and of course, it will get the occasional rally. That being said, we have a long way to go before Bitcoin builds enough of a base to be attractive, so I think what we are hoping to see is some type of breakdown followed by a couple of months of consolidation. I think this is very likely going to end up being much like the last crypto winter, meaning that we will go sideways for a while, while people continue to accumulate. If we get down to the $12,000 level I will start accumulating, but I think we have plenty of time to do that. There’s no realistic scenario in which I am a buyer as things stand currently. However, if that changes I’ll be the first to let you know here at DailyForex.

I think you have plenty of time to build up a move for the next cycle.

Ethereum fell a bit on Wednesday as we continue to see the decimation of the crypto markets. The $2000 level offered a little bit of resistance, and we have now pulled significantly below there to think that we are going to test the lows again. At this point, the market is very likely to break below the $1700 level over the next several sessions, and when it does, I suspect that there is going to be a lot of selling pressure.

Rallies at this point will be sold into, and I do think that the $2000 level will continue to offer a little bit of resistance. Above there, the next resistance barrier is at the $2200 level. Furthermore, we also have the 50-day EMA that sits just above the $2300 level and is dropping from there. In other words, there are a lot of landmines on the way back up, and there is nothing out there that suggests crypto should be rallying at this point. After all, the monetary policy from several central banks around the world is getting tighter, which takes risk appetite out of the markets. Remember, crypto is about as far out on the risk spectrum as you can get, so it’s going to be a while before significant money comes back into the markets.

Looking at the start, I think that you will continue to see traders come in and fade rallies when they occur, and once we break down below the $1700 level, the market will see an acceleration to the downside, and it would not surprise me at all to see Ethereum enter another “crypto winter” type of action as we have seen a couple of times in the past.

I like the Ethereum blockchain, and therefore I like Ether, but that does not mean that I have to like it right here, right now. I think we will have plenty of opportunities to buy ETH at much lower levels, and that’s exactly what I plan on doing. I feel no need to get overly bullish at this point nor do I think that there is any rush to accumulate a huge position. I think you have plenty of time to build up a move for the next cycle.