Bitcoin has pulled back slightly during the trading session on Thursday as we got fairly close to the 50 Day EMA. This indicator has been offering a bit of dynamic resistance recently, and therefore the move is not a huge surprise. After all, Bitcoin has struggled quite a bit over the last several months as far as momentum is concerned, so to think that we were simply going to explode to the upside was probably a bit of a pipe dream.
It seems as if the Bitcoin market is very sensitive to the $40,000 level as it is acting as a magnet for price. That will more than likely continue to be the case, and as a result of this, I believe that we are looking at a situation where we are going to continue to go back and forth. That being said, consolidation in this general vicinity can either be a significant accumulation area, or it may be “consolidation that leads to continuation.”
I do not see the crypto markets being able to hang on to gains for a while now, at least not until we get past the monetary tightening situation, we find ourselves in. Currently, we are talking about a potential interest rate hike at every Federal Reserve meeting between now and the end of the year, so it is very likely that we could see a lot of “risk-off behavior” in the markets. That would almost certainly be toxic for not only Bitcoin but crypto markets in general.
Think of it this way: Institutional traders are now a huge part of this market, so therefore they will start to treat Bitcoin as just another market. I understand that there are a lot of Bitcoin maximalists out there, but until they understand the fact that Bitcoin is yet just another asset that big money pulls in and out of, they will not understand that the economic cycle most certainly has a major influence on Bitcoin. This is an argument that I have been having with people for a while, and this year seems to be showing just how true that assumption is. I believe at this point we are more than likely going to see an easier path lower than higher, and if we break down below the $35,000 level, we will almost certainly drop another $5000 rather quickly.
