Bitcoin markets crashed again on Friday to reach down towards the recent consolidation area yet again. The $40,000 level is a large, round, psychologically significant figure and an area that has been difficult to deal with previously. The headlines coming out of China continue to cause issues with Bitcoin, because the fact that China has made crypto transactions illegal has a lot of people on the mainland concerned. After all, China is one of the biggest markets for crypto, so that continues to be a major issue.
The market has sold off quite rapidly, so the question now is whether or not the 200-day EMA will hold support as well. After all, this is an area that has been significant resistance previously as we have been in a consolidation area that was bordered by that. The market will continue to hear a lot of noise, but it is worth noting that we have bounced a bit towards the end of the session.
Just above, the 50-day EMA sits at the top of the range, just below the $45,000 level. If we were to break above that, it would obviously change a lot, perhaps opening up a move towards the $48,000 level where we had sold off previously. One thing is for sure: the market continues to see a lot of downward pressure, so whether or not $40,000 holds will be a crucial distinction for where we go next. If we do break down below the $40,000 level on a daily close, it is very likely that the momentum to the downside will pick up. That obviously would be very bad for Bitcoin and, by extension, crypto in general, as alt coins tend to follow Bitcoin.
The market continues to see a lot of choppy behavior in this area, but sooner or later we will probably break out or break down. Once we do, I anticipate that we will see more of a bigger move. At this point, the market is going to continue to be very noisy, and it is likely that the momentum building up allows for inertia to come into the market. Bitcoin will continue to have to deal with China, but I do think that sooner or later the value hunters come back.
