Bitcoin broke above the $50,000 level on Monday but then pulled back to form a bit of a shooting star. It is not a huge surprise to think that the $50,000 level would offer a bit of resistance, because at the end of the day it is a large, round, psychologically significant figure. The $50,000 level is also previous support, so the fact that it would be resistance should not be a huge surprise. At this point, the market is likely to see a lot of noisy behavior in this area, and the fact that we have the Jackson Hole Symposium going on at the same time probably has quite a bit to do with what we see next as well.
The main reason that the market may be pausing beyond the fact that it was previous support, is the fact that the market has to pay close attention to the tapering statement (or lack of) from Jerome Powell at Jackson Hole. After all, this is a market that continues to hear a lot of questions when it comes to inflation and quantitative easing, which some people call “money printing”. If we see less of it coming out of the United States, it is very possible that that might actually to be negative for Bitcoin. This does not mean that it would be an opportunity to start selling, just that it may prove to be a little “less bullish.”
There are a lot of questions when it comes to Bitcoin, because we have yet to see it used for anything other than speculation. It has been a multitude of different things over the last couple of years, as it was once thought of as “better money”, and then it became a hedge for inflation. It was a store of wealth at one point, and now it is simply a speculative asset that a lot of larger Wall Street banks are getting involved in. At the end of the day, nobody really knows what Bitcoin will end up being, and there are better cryptocurrencies out there for speed and usability. Nonetheless, it still continues to be the “gold standard” of crypto, so as a result it is always going to attract a certain amount of momentum. If we can break above the $52,000 level, then we should continue to go looking towards the $55,000 level. In the short term, I believe that the 45,000 level should offer support on any pullback.
