The Bitcoin market rallied rather significantly again on Tuesday as tensions continue to cause concerns about moving money around the world. With Russia being effectively isolated, there is a certain amount of pressure to the upside for Bitcoin as traders are starting to bet on the idea of crypto being used to move most of the money out of the country. That being said, it is also worth noting that the market was already starting to see momentum gaining to the upside.
It is worth noting that the $45,000 level has offered resistance as well, and that is an area that I have been talking about for a while. This is an area that if we can break above, that could kick off a significant rally. The fact that we have pulled back from there suggests that we could still be looking at trying to form some type of consolidation area. That would build a $10,000 level consolidation rectangle, which does make sense when it comes to Bitcoin as it tends to move in those blocks.
On the downside, the $40,000 level should be thought of as “fair value” if we do hang out in this region. Breaking down below there then opens up the possibility of a move towards the $35,000 level. On the other hand, if we do turn around and close significantly above the $45,000 level, then we could see the market go looking towards the $50,000 level. While Bitcoin has been rather impressive over the last week or so, we have a lot of concerns out there that could continue to cause issues so I'm still leaning towards the idea of consolidation until proven otherwise - in other words, breaking above the $45,000 level on a daily close.
It is very likely that the volatility is going to go higher, not lower. Pay close attention to the VIX, because it appears that Bitcoin has a -90% correlation to that index, so it shows just how mainstream this market has become. In other words, you are starting to see a lot of mature movement, meaning that it will move right along with other risk assets. Crypto is no longer immune to Wall Street musings and the usual correlations between risk appetite and other such problems.
