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It is not until we break above the $40,000 level that I would become bullish.
Bitcoin rallied a bit on Monday as we continue to hang around the $30,000 level. The Bitcoin market has been very quiet over the last week or so, but I do believe that it is only a matter of time before we see some type of an attempt to recover. Any recovery rally at this point would be an opportunity to start shorting because the Federal Reserve will continue to be very hawkish and tight with its monetary policy. Furthermore, the 50-day EMA is dropping below the $37,000 level.
On the other hand, if we break down below the hammer from last week, that could open up a significant amount of selling pressure, as the $25,000 level will continue to be important, and perhaps even the target. If we were to break down below the $25,000 level, it would spell the end of Bitcoin in the short term. In that general vicinity, I would anticipate a massive selloff.
If we were to break down below the $25,000 level, then it is likely that we could go reaching to the $20,000 level. If the market breaks down below that level, it would open up a “crypto winter.” This very well could be what happens next, because there is nothing fundamental to make Bitcoin rally at this point. The market has held steady for a couple of weeks, but at this point that is about the best thing you can say.
Longer term, I think that Bitcoin will be bought again, but I think you will also get an opportunity to buy at much lower levels. If you are a longer-term believer in Bitcoin, then you could dip your toe in it occasionally, building up a position in little bits and pieces. The market certainly has a lot to fight through, and all of the fraud that is suddenly being exposed in the crypto markets will continue to weigh upon all assets. Bitcoin is the first place where people put money to work, and it is also the first place where people start to pull money out of. Rallies at this point continue to be selling opportunities, especially if you can easily short Bitcoin via CFD markets or leverage. In fact, it is not until we break above the $40,000 level that I would become bullish.
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