- On Thursday, Bitcoin attempted to rally but encountered significant resistance and is now struggling to gain momentum.
- Due to its high-risk factor, Bitcoin requires a large number of confident investors to take on its volatility.
- However, the recent shift away from risk appetite has caused Bitcoin to struggle.
Additionally, the psychological significance of the $25,000 level is causing the market to pull back, making it likely that the market will continue to be volatile at this level and could potentially drop. However, breaking above this level could be a positive signal and result in Bitcoin reaching levels of $27,500 or even $30,000.
Despite the challenges, there have been several disruptions in the crypto space, including exchanges going under and fraud being exposed. Bitcoin has been able to recover from these situations, which indicates hope for its future. In the short term, however, a pullback appears to be imminent.
Pullback is Needed
The $21,250 level, which is also the most recent swing low, could be an important area for Bitcoin, and many buyers may jump back in if this level is tested. However, if this level is broken, it could signal weakness, and the price may quickly drop to $20,000 or even $17,500, where the momentum reentered the market. If we were to reach that area, I suspect it would probably have a lot to do with risk appetite being eviscerated, and of course, the US dollar taking off in strength. That is a very real possibility at this point, as the market is finally coming to grips with the idea that the Federal Reserve is actually serious about being tight for longer. This brings up a lot of questions about Bitcoin because it’s never really been tested by tight monetary policy. So far, it has failed that test so it is interesting to see how much longer it can keep up its momentum.
At the end of the day, price is truth, suggestively following the markets and allowing them to do whatever they are going to do. Try not to overthink it, because quite frankly there are so many moving pieces at the moment that it’s very difficult to get aggressive in one direction or the other. We have recently seen a big move in Bitcoin, so pullback probably is needed by both the buyers and the sellers at this point.
Ready to trade Bitcoin in USD? We’ve shortlisted the best crypto brokers in the industry for you.