- Bitcoin has rallied slightly in the early hours on Tuesday as we continue to see a lot of choppy sideways behavior.
BTC/USD
Bitcoin has rallied slightly in the early hours on Tuesday as we continue to see a lot of choppy sideways behavior. At this point, I think Bitcoin becomes very interesting because we are in the midst of trying to sort out what to do next. So far, it looks like it could be a bit of a bottoming pattern, but we don't have any fundamental reason for Bitcoin to turn things around because, quite frankly, I think now that it's an institutionally driven asset, most institutions aren't looking to put on major positions just ahead of New Year's Day. Because of this, I think you've got a situation where buying on the dip is possible, but you are going to have to be extraordinarily patient.
After all, this time of year, as I said, doesn't produce explosive moves, and of course, Bitcoin just got hammered recently. So, at this point, you have to ask the question whether or not it makes any real sense for traders to allocate a massive amount of money in this market. That being said, if we can recapture the $93,000 level, I think you have a shot at Bitcoin recovering. If we fall from here, then Bitcoin will almost certainly go looking to the $80,000 level and see whether or not it's going to hold as support. Anything below there gets really ugly, really quick.
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Digital Gold or Cash?
I think Bitcoin is in the process of trying to figure out what it is again, because, quite frankly, it's been a multitude of different things over the years. It's been digital cash. It has also been digital gold. It had been a great way to transfer wealth across borders. It was the savior of everything that ailed the world at one point. So, I think now the real question that traders are going to be asking, especially from the institutional side, is, will it ever be adopted? And quite frankly, it hasn't been adopted.
You hear stories about smaller economies adopting it here and there, and that's true, but the reality is that where the money is, in places like the United States, Europe, and China, it's not really used on a day-to-day basis. And institutional traders will eventually start to question that. I don't think we're to the point where the whole narrative falls apart yet, but I do think that is its long-term risk. I certainly know that's one of the conversations being had at the moment. I am mildly cautiously somewhat optimistic here, the longer we go.