Bitcoin has had a negative trading session during Wednesday heading towards the Federal Reserve Meeting Minutes. This week is going to continue to be very interesting, because not only do we have this release, but we also have the Jackson Hole Symposium going on, and although it doesn’t directly address cryptocurrency, it does directly affect fiat currencies, which of course crypto is typically priced in.
I see massive amounts of support underneath based upon the trend line, and of course the $10,000 level is right there. This will attract a lot of attention, and if you look at the longer-term charts, you can see that the markets tend to pay attention to $1000 at a time. In other words, you can see that the $13,000 level has offered resistance, just as the $9000 level has offered both support and resistance. You can think of those as “horizontal trend lines” of support/resistance.
Quite frankly, it is a bit concerning to see how the highs are starting to get lower again, and we are reaching down towards the uptrend line. If we can break through that uptrend line, then the overall trend is going to continue to break down. Looking at this chart, it’s very difficult to imagine a scenario where breaking through this trendline would be a good thing. After all, central banks around the world have been easing monetary policy, and money has been leaving fiat and going into crypto and precious metals in order to preserve wealth. If that suddenly changes, then it’s obvious that something more fundamental is starting to happen.
By contrast, precious metals don’t look as if they are breaking down so I think this suggests that the crypto currency market needs to turn things back around and with a quickness in order to sustain the rally. The question now is whether or not there is enough demand out there?
The next trade in this market should make itself well-known here soon, as a break down below the $9500 level on a daily close will probably open up the move down to the $8000 handle. Alternately, if at the end of the trading session we find ourselves bouncing a bit, I suspect the market is probably going to go to the $11,000 level, possibly even the $12,000 level after that. One thing is for sure, it’s a bit of a “binary trade”, and by the end of the trading session should show where the next leg sends this market looking to.