Bitcoin looks as if it is struggling to hold itself above major support. Ultimately, this is a market that is ready to make a bigger move.
BTCUSD
Bitcoin plunged during the early hours on Friday as we continued to see a lot of negativities. All things being equal, this is a market that I think is on the precipice of making a bigger move and we are trying to sort out what happens next at a very crucial level.
I have been looking at the $84,000 level closely as a potential floor in the market. The fact that the market is trying to form some type of bounce here as we are in the midst of forming a hammer, but it will be interesting to see how this plays out because Kevin Warsh, the Federal Reserve Chairman pick for President Donald Trump, is a little bit hawkish and that could continue to strengthen the US dollar and perhaps have people running from Bitcoin.
This could end up being yet another blow to the crypto markets in general. If we were to break down below the $80,000 level that really unleashes the floodgates; we at that point in time could be seeing Bitcoin drop to the $60,000 level.
Market Liquidation Concerns
That being said, I do see a potential for a bit of a bounce here, perhaps sending the market towards the $90,000 level, but we need some type of momentum with the risk-on type of behavior around the market perhaps capturing the Bitcoin crowd as well.
As things stand right now, we are in the midst of trying to form a significant double bottom. We will just have to wait and see if that actually plays out because this could in theory at least be a very big buying opportunity, but we need some reason for Bitcoin to rally. As things stand right now, we unfortunately just don't have it.
This is a market that has just seen over $1.5 billion in long positions liquidated and that of course is going to continue to be a major problem as there just is no positive momentum at the moment. But we are also in a major area of support so if it is going to happen, it is probably going to happen now.
Potential signal: IF Bitcoin falls below the crucial $80,000 level on a daily close, it’s time to actively short this market. A stop at $83,000 and a target of $70,000 are what I will be doing.
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