- The BTC/USD didn’t do much during the training session on Friday as we continue to hover right around the $23,500 level.
- However, the Thursday candlestick was a shooting star, and we are starting to see strength in the US dollar in the Forex markets.
- That might be reason enough to see Bitcoin struggle a bit, but the fact that we did not sell off during the very volatile Friday session is probably one thing to take away in the “strong column.”
Breaking down below the $23,000 level opens a big move to the downside, to reach out to the 200-Day EMA at the very least. We have clearly run out of momentum, but that’s not a huge surprise considering just how strong we were to the upside. I also believe that the 25,000 level above should offer a significant amount of resistance, both from a historical perspective and of course a psychological one as it is a large, round, psychologically significant figure.
Be Cautious
The markets have been betting that the Federal Reserve will have to loosen monetary policy sooner than they say, so, therefore, assets such as Bitcoin get a bit of a boost. After all, Bitcoin is all about getting away from loose monetary policy, but at this point, I think that’s a little bit misguided. Yes, inflation seems to be dropping a bit, but tight monetary policy is going to be a feature, not a passing phase of monetary momentum for the next several months, if not years. After all, inflation is nowhere near the 2% target that the Federal Reserve is laid out, even though it is moving in the right direction.
However, the jobs number on Friday coming out of 518,000 may spook the market, but since if there are that many people getting hired, inflation will probably rip to the upside. We are on the precipice of a bigger move, and therefore I think we need to pay close attention to this market if we do break above the $25,000 level, then there’s no point in arguing in at that point you will just simply have to be long of this market. I think Bitcoin has a lot to prove here, so what we need is a catalyst for more people to pile into the market. Yes, I realize it’s been a nice rally, but don’t fall for the punditry on the financial channels, the nice return over the last month pales in comparison to the losses of the last year. It’s a game of semantics.
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