This pullback has been rather deep, and one would have to think that the market is going to continue to struggle.
The Bitcoin market broke down significantly on Monday as we kicked off the week on the wrong foot. That being said, the market looks as if it is going to test this $40,000 level, and I think there is a significant amount of support that extends from there to the $38,000 level. Because of this, I think it is probably only a matter of time before the buyers get involved, but we need to see some type of bounce or supportive candlestick before putting money to work.
Bitcoin has had a nice run as of late, but this pullback is rather deep, and it does make you wonder whether or not we can continue to go higher at the moment. Ultimately, the market continues to see a lot of concern out there when it comes to global risk appetite, which is a major influence on what happens in Bitcoin. The Bitcoin market is pretty far out on the risk spectrum, so you need to see some type of “risk-on” type of situation to get people to buy Bitcoin again.
The US dollar continues to be like a wrecking ball for a lot of other assets, so one would have to think that that could continue to be the case here. If we break down below the $37,500 level, then we could more than likely go looking to the $35,000 level for support again. A breakdown below that level would be catastrophic. I think that the $30,000 level would be targeted almost immediately, and things will continue to get nasty again.
On the upside, if we can take out the 50-day EMA to the upside, is very likely that we could continue to go higher, maybe even threaten the $50,000 level given enough time. That being said, this pullback has been rather deep, and one would have to think that the market is going to continue to struggle. Ultimately, this is a market that looks just as confused as many other markets, so I would not expect any type of stability or sanity coming out of Bitcoin until you see it coming out of some of the more traditional markets. If we can get things together in a market like the NASDAQ 100, Bitcoin is going to be even worse.