Bitcoin tried to rally on Monday but had to give up the gains and then broke to the $20,000 level. At this point, the market is likely to go much lower, and perhaps even take out the lows from the last couple of days. If we were to do that, then it’s likely that Bitcoin will fall apart and go much lower, perhaps down to the $17,500 level.
If we do break down below there, then the $15,000 level would be targeted next, but I think the real support is to be found at the $12,000 level. The $12,000 level was crucial on longer-term charts; therefore I think it makes quite a bit of sense that we would see that area come into the picture. At that juncture, I think that there will be plenty of value hunters trying to get involved in Bitcoin, and we desperately need to see Bitcoin hold it there. If the market breaks through that level to the downside, things could get rather ugly.
Bitcoin is going to continue to struggle because most of the cryptocurrency world is as well. Yes, Bitcoin will outperform all the rest of them, but at the end of the day, Bitcoin is not being adopted in the ways that people had hoped. Furthermore, Bitcoin is pretty far out on the risk spectrum, so those who manage significant money will not be willing to pile into this market considering the type of economic backdrop that we have right now. Looking at this chart, rallies will get sold into, especially near the 50 Day EMA, assuming that we can even get that far.
I think the downtrend continues for some time, and therefore even if you are bullish on the future of Bitcoin, you have all kinds of time before you need to get involved. Longer-term believers may be looking to pick up little bits and pieces down at this lower level because they believe that history will repeat itself. I think the biggest challenge that Bitcoin faces is that nobody truly uses it. As long as that’s the case, there’s only so much of the “greater full theory” that you can spread in order to get people to buy it. There are a lot of people out there who believe Bitcoin will be the world’s reserve currency, which is ridiculous if you think about it. However, it does hold some type of value to someone, so it is probably only a matter of time before we bounce a bit.
