Even if you do not trade Bitcoin, you need to pay close attention to what it is doing to understand what other crypto markets may do.
- Bitcoin markets rallied a bit on Friday but gave back gains rather quickly as we continue to go sideways.
- We had initially broken out of a consolidation area, and it’s likely that traders were looking for more momentum.
- However, it seems like we did not find it. In other words, it looks like technical analysis is starting to fail.
Watching the 50-Day EMA
The 50-day EMA will attract a lot of attention, so it is worth paying close attention to the fact that a lot of traders on the retail side will be involved. However, it’s also worth noting that there are a whole plethora of reasons why Bitcoin, and crypto in general, should continue to struggle. After all, the risk appetite is not exactly strong out there, which does not bode well for digital assets. After all, they are far too volatile for large institutions to risk money and at the moment, of course, there have been a lot of headlines that have driven down demand and confidence.
If we were to break above the top of the candlestick for the Friday session, we may grind higher, perhaps reaching the $28,000 level. The $20,000 level is the bottom of a previous consolidation, which extends all the way to the $32,000 level. I think testing this area is probably the best-case scenario for Bitcoin, which should only open up the possibility of further downward pressure.
On the other hand, if we break down below the 50-day EMA, then it is likely that we could go down to the $20,000 level. If we break down below there, then we could look at a move down to the $12,000 level. The $12,000 level is structurally important, so I think it’s probably only a matter of time before we see buyers coming in to pick this market up. Longer term, I think that would be a prime area to start building a larger accumulation position and waiting for the next major crypto run. Bitcoin is going to continue to be the leader in the crypto world, and I just don’t see that changing anytime soon. Even if you do not trade Bitcoin, you need to pay close attention to what it is doing to understand what other crypto markets may do.
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