Bitcoin rallied a bit on Wednesday, hanging on to the $37,500 support level. This is an area that needs to hold because if we break it down below there it is likely that the Bitcoin market will go looking to reach the $35,000 level. At the $35,000 level, I would anticipate a significant amount of support, and if we break down below there that would obviously tell us a lot.
It is worth noting that the market has struggled around the $40,000 level as of late, and it seems as if the $40,000 level attracts both buyers and sellers. We are in a short-term consolidation phase, as crypto simply has done very little to get excited about over the last couple of months. With this being the case, I think it is probably only a matter of time before we see inertia build and then get a significant breakout. However, we obviously do not have that going on right now, and I think it is probably only a matter of time before we see an impulsive candlestick that we can follow, but right now we obviously do not have it.
Above, there is the 50-day EMA which sits at roughly $42,000, and beyond that, we have the 200-day EMA which sits just underneath the $44,000 level. Ultimately, this is a market that I think will continue to be noisy, so I do not like the idea of putting a lot of money into this market right now. That being said, the longer we continue to consolidate, the more likely traders will be comfortable stepping in and buying Bitcoin. However, if we were to break down below the $35,000 level, that could kick off a drastic sell-off, perhaps sending the market much lower, and into what is known as “crypto winter.” This is when the market simply goes sideways or falls, and there is no real interest in the market.
On the upside, if we can take out the 200-day EMA, then it is likely that we will break through the $45,000 level and go looking to test the $50,000 level above. That obviously is a large, round, psychologically significant figure, so I would expect a lot of headlines to be made around that area.
