Bitcoin markets have plunged quite drastically to reach towards the $33,350 level on Monday in the latest round of panic trading. As traders continue to look at this market through the prism of “risk off” type of trading, we may have finally found an area where some of the selling may slow down. If we do see a bit of a bounce from here, I think that we will probably go looking towards the $40,000 level. The $40,000 level is an area that had been supported in the past, so one would anticipate that it should be resistance going forward. Ultimately, a hammer generally will have some value hunters coming back in, but it is not until the overall risk appetite comes down that Bitcoin can really start to take off.
It is worth noting that the Bitcoin and the S&P 500 have roughly an 86% correlation as of late, so if the stock market continues to sell off, that is probably a sign that Bitcoin will continue to take a punch to the face. This being said, I think that the next rally will more likely than not end up being a selling opportunity and I would not jump on what seems to be a little bit of positivity. Given enough time, this is a market that will continue to see a lot of trouble. The Bitcoin market has seen a massive amount of technical damage, so at this point it might be more or less a “short covering rally” on a short timeframe.
Crypto probably has a long way to go before we can really get a big move, so it is more likely than not going to be a situation where you have plenty of time to get involved and build up a position. I would love to see some type of sideways action for an extended amount of time so that I can build up and accumulate going forward. I would also love to see some type of short-term “crypto winter” so that I can buy a ton of Bitcoin and Ethereum. Whether or not I get that might be a completely different situation, but that currently is the most likely of scenarios where you get plenty of time to take advantage of this massive selloff.
