Bitcoin initially tried to rally during the day on Wednesday but gave bank gain rather quickly. In relatively quiet training, you can take this as either a positive or negative, because the previous session was so brutal. The simple fact that we sent still is probably a minor victory by the Bitcoin bulls, but quite frankly that’s nothing to get excited about.
When you look at the size of the candlestick from the Tuesday session, one would expect a much more resilient bounce in what would be a bullish market. There is no hiding the fact that Bitcoin has been in a downtrend for a while, and when a look at the ATR, or the Average True Range, you can see it has been steadily declining since March. This means that there may just not be enough interest in Bitcoin at the moment to lift the price significantly.
Enter the Federal Reserve
In this scenario, it’s a bit ironic that Bitcoin traders need the Federal Reserve to save them. I’m old enough to remember when Bitcoin was supposed to keep you out of the central banking system because central banks around the world were simply flooding the markets with money. However, nobody stopped to ask the question “What would happen if they stopped?” We are starting to see that happen right now.
The Federal Reserve is very tight with its monetary policy right now and is only going to get tighter. Balance sheet runoff alone is going to make financial conditions relatively tight, so I find it difficult to imagine this is an environment that’s going to be good for Bitcoin. Do not get me wrong, eventually, they will break something and have to turn around, but it’s not here, and it’s not now.
I have a potential target of $12,000 in Bitcoin. I recognize that seems a bit extreme, but this is a market that has done that type of move more than once. Furthermore, if we break it down below the $18,000 level, there is very little on the charts that suggest people were going to jump in and save It going between now and then. For what it is worth, I would love to start buying Bitcoin at that level.