Bitcoin has gone back and forth during the trading session on Thursday as we are trying to figure out where the bottom of the market is. We ended up forming a bit of a hammer, but we are well below the $30,000 level and that is not a good look. Ultimately, the market will continue to see any move above the $30,000 level as potentially positive, but even then I would be very cautious about trying to buy this market. After all, Bitcoin and the rest of crypto is essentially going through a major disaster at this point.
If we break down below the bottom of the Thursday session, then it is likely that we could see this market drop quite drastically, perhaps breaking below the $25,000 level quite handily. At that point, then you would anticipate a move down to the $20,000 level. At this point, I think that is probably the base case scenario, but we have sold off so viciously that a little bit of a recovery rally could be possible.
Keep in mind that there is a huge problem with risk right now, and people were not willing to take too much risk at the moment. This does not bode well for crypto, and of course Bitcoin will suffer as a result. Ultimately, I look at any rally at this point as a nice opportunity to start shorting, as the trend is most definitely said. That does not necessarily mean that it is going to be easy to short this market right away, but signs of exhaustion will appear. Those signs of exhaustion in the form of candlesticks like shooting stars will be jumped upon by traders.
There is a real threat of having a “crypto winter” coming, as the money is just flying out of the crypto markets in an unrelenting manner. At this point, I do not have a scenario in which I would be a buyer of Bitcoin or any other crypto for that matter, as they all are toxic at this point. I do believe that we have already seen the market make up its mind, and at this juncture you need to pay attention to what it is trying to tell you. I understand that recently we have heard a lot of chirping around the world about how we are near the cost basis of Michael Saylor, but quite frankly there is no reason to trade.
