The Bitcoin market initially fell during trading on Monday as there was a bit of a “risk-off” type of situation around the world. We had seen several other markets do similar moves, running towards the US dollar. That being said, the Bitcoin market has turned things around to break above the crucial $40,000 level, and it looks as if we are ready to attempt to look towards the 50 day EMA. This is an indicator that a lot of people will pay close attention to, as it is so widely followed by technicians.
Whether or not we can stay above the $40,000 level might be a completely different question though, because quite frankly there are a lot of concerns out there when it comes to geopolitics, and of course inflationary headwinds. The Federal Reserve is looking to tighten monetary policy, but traders are starting to price out the idea of a 50 basis point rate hike in the month of March, which does give a little bit of a reprieve for risk assets such as Bitcoin.
This is a good sign for crypto in general because it does tend to follow Bitcoin over the longer term. As Bitcoin goes, so goes the rest of the cryptocurrency markets. The market also has recently formed a bit of a “double bottom” near the $35,000 level underneath, and that could be the “floor in the market.” It is a little early to tell now, but it looks to me as if we are at least going to respect that area for a while. If we were to break down below it, that would obviously be a very negative turn of events. In that scenario, we could be looking at “crypto winter”, when crypto markets simply do very little and drift back and forth.
If we were to break above the $45,000 level, that could kick off a longer-term bullish market, but one will have to wait and see how this plays out. There is some speculation that significant amounts of money is trying to leave Russia via Bitcoin and other crypto markets, which could cause a little bit of demand. I do not know if that is true or not, but the reality is if the price starts to rise, more people will jump in and try to take advantage of it.
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