Bitcoin markets initially fell during the trading session on Friday, reaching down towards the $13,000 level before turning around and forming a hammer. The hammer is a bullish sign, but if we were to break down below it is likely that we would see people claiming it would turn into a “hanging man”. But Bitcoin is rallying for a real reason, and it is not a matter of technical analysis. There is real and substantial fear that central banks around the world will continue to crush fiat currency.
Looking at this chart, I believe that the $12,000 level underneath will be essentially operating as a “floor in the market”, as it was previous resistance. The fact that we have broken above there previously suggests that we may need to pull back there in order to retest the area, which is a good sign for buyers. You want to see some type of value re-enter the marketplace and I believe that a lot of traders will be willing to jump into this market and take advantage of “cheap Bitcoin.”
Where we end up when it comes to the price of Bitcoin is another question, but clearly it will be higher. I think that the $15,000 level is in the sights of the most bullish traders. As long as central banks around the world continue to flood the markets with cheap currency, demand for hard assets as well as other alternative assets such as Bitcoin will increase. Even if we break down below the $12,000 level, I think that for every $1000 underneath there you will see people trying to get involved in the Bitcoin market.
While I am not a “Bitcoin believer”, I recognize price is truth. Whether or not it gets adopted down the road with any type of scale is a completely different question. But even if you do not believe in Bitcoin, you will be forced to assume from this chart that whatever asset this is will be going higher. It is a simple function of the markets and there is more demand than there is supply, at least at the moment. Central banks around the world are nowhere near tightening monetary policy and will not be for years. Because of this, it is hard to imagine a scenario where a selloff in this market is anything more than just a selloff.