Bitcoin markets got absolutely hammered during the trading session on Tuesday, as we continue to see massive amounts of volatility. This makes sense, considering that the market has been far too parabolic as of late, and sooner or later it needed to drop enough to find buyers underneath. After all, markets cannot go straight up in the air forever. This had been overdone for a while, so at this point I think what we are looking at is the market trying to find value. The $45,000 level has shown itself to be supportive, as I had suggested it could previously. The fact that this market has fallen 15% in one session is not conducive to being very easy to jump right back into.
This is a market that I think continues to show quite a bit of bullish pressure despite the fact that we have just turned that massive candlestick from the previous session into a “hanging man.” The Bitcoin market has attracted a lot of attention as of late, and I still believe that we could very well drop down towards the $40,000 level. That would be an area that would coincide with the previous resistance, and the 50-day EMA which is reaching towards it.
The Bitcoin market tends to pay close attention to the 50-day EMA. If we do turn around, I believe that breaking above the $50,000 level would be a victory for the bullish traders out there and could reinstate the move higher. Nonetheless, breaking below the $45,000 level will more than likely have Bitcoin looking towards the $40,000 level rather quickly. A breakdown below that level could make things a bit messier and ugly, but at this point I am not overly concerned about it. This is a pullback that has been desperately needed, and should eventually cool off some of the “froth” that has been building up in the market. The fact that we closed this low in the range of the day tells me there is probably more selling pressure to come. Regardless, I also see multiple areas underneath that the buyers will probably be tempted to jump back in.
