- The BTC/USD initially tried to rally during the trading session on Thursday but seems to be sticking to the 23,000-level light blue.
- This is an area that has been in massive consolidation, and if you look to the left on the chart, you can see that in August of last year, we had seen a lot of selling pressure from this region.
- Because of this, I think it does make sense that we sit on the sidelines and try to figure out where we’re going next.
Ironically, even though Bitcoin is supposed to be “outside of the banking system”, the reality is that the Federal Reserve meeting next week will be a major event for the Bitcoin market because it relies on cheap and loose monetary policy to become viable. Most of what we have seen recently has been twofold: the first thing of course is that traders are betting that the Federal Reserve is going to slow down its monetary policy, perhaps even pivoting later this year. The 2nd reason is that the recent scandals and criminal behavior in the crypto world seemingly have not fazed holders of Bitcoin.
Bitcoin to be Resilient in the Long Term
The fact that one of the largest exchanges in the world was just proven to be a Ponzi scheme and that Bitcoin didn’t fall any further is a very strong sign. Whether or not that’s a reason for going higher for longer is a completely different question, but it is a good sign that Bitcoin is going to be resilient over the long term.
The question now is whether or not it can function in a tight monetary policy environment. Quite frankly, it was done in reaction to the Federal Reserve policy that had been so destructive for the US dollar. Because of this, I think we’ve got a situation where there are a lot of concerns right now as to where we go next. The market will probably continue to be noisy, to say the least, and I think that given enough time we will probably see some type of pullback. The question now is whether or not we break down below the 200-Day EMA which is sitting right around the $21,250 level. If we were to break down below there, then I think we roll over. On the other hand, if we do rally from here, then it’s possible that we could take out above the $25,000 level.
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