Summary:

Bitcoin shows signs of early bottoming as it recovers Tuesday’s losses, though confirmation remains uncertain. Institutional involvement is slowing volatility and extending recovery time. Key levels include support at $80,000 and resistance near $92,500, with downside risks if support fails.

Bitcoin

Bitcoin has rallied a bit here early on Tuesday to take out quite a bit of the losses on Monday. This to me is signaling a potential bottoming pattern, although it is still early to discuss that with any sense of certainty. But this is what you want to see. You want to see a massive sell-off, a bounce, a sell-off again, and resiliency.

The Bitcoin market has structurally changed in the sense that institutions are starting to hold it. So therefore it will behave more like a typical Wall Street asset. With that being the case, it does make a certain amount of sense that the recovery will be slower than it had been in the past. After all, it’s not just retail traders jumping in and going crazy.

It is actual measured institutional traders that have benchmarks, they have risk parameters, and everything else that they have to put into play in order to keep their jobs. The $80,000 level looks like a really strong candidate for support. And I think somewhere right around $92,500, you have resistance. It’s a bit squishy, and you could make an argument for $93,000 instead, but you could also make an argument for $92,000, so I’m just splitting the difference here for resistance.

Key Technical Levels

If we can break above there, we still have to deal with $100,000. This is why I think the recovery and going back to the highs, even if we’ve already made the bottom, is going to be more of a grind. The good news is though, that if you believe in Bitcoin for the longer term, it gives you plenty of time to accumulate on dips.

That being said, if we break below $80,000, that would be very negative and it sends Bitcoin looking to $75,000 and then possibly $58,000. This is a market that is reeling from the recent sell-off. These types of sell-offs typically don’t recover very quickly, at least not without some type of external pressure. That being said, it does look like we’re in the very early part of potentially finding a bottom.