Bitcoin markets bounced a bit from the 200-day EMA to show signs of stability, which is exactly what we need at this point. I do believe that market participants are now going to target the $50,000 level. It is on a break above the $51,000 level that I think Bitcoin will have an opportunity to go much higher, and perhaps finally be done with this massive selloff. Yes, there are a lot of people out there that are looking for some type of new “crypto winter”, but the reality is that although we have had a vicious selloff, we are still technically holding the crucial 200 day EMA.
Furthermore, keep in mind that a lot of institutional managers are out there trading Bitcoin now, and that means that they have to risk-manage their positions. In other words, we will probably see selloff like this going forward. That being said, there is still the incredible statistic that 80% of people who own Bitcoin continue to hold going forward. In other words, they do not sell. With that in the back of your mind, as long as you are using a reasonable position size in your portfolio, you should not be overly concerned about these occasional breakdowns.
To the downside, if we were to break down below the 200 day EMA, then it is very possible that we will go looking towards the $45,000 level, an area that I think is supportive, right along with the $40,000 level. As long as we can stay above the $40,000 level, then I think we still have a relatively strong chance of the recovery. Do not get me wrong: I do not want to see Bitcoin fall that far, and it does not look like it is going to, but it is a potential reality.
As I write this, the US dollar is falling a bit, so that will help Bitcoin. The Bitcoin market has been eviscerated as of late, so it makes sense that we would see a bounce at the very least. Longer term, I fully anticipate that we will go back to the all-time highs, perhaps sometime in January or February. I have no interest in shorting this market, because I am more of a longer-term holder of crypto these days.
