As long as we can stay above the $40,000 level, then Bitcoin has a very good chance of recovering and continuing to go higher.
The Bitcoin market has pulled back just a bit during the trading session on Thursday as we continue to see a lot of noisy behavior in general. Because of this, I think you need to be cautious with your position size more than anything else, as we will probably get thrown around quite a bit. That being said, it is worth noting that the $40,000 level has offered significant support, and now I think is a bit of a “line in the sand” when it comes to the trend, and as long as we can stay above that level, then I think Bitcoin has a very good chance of recovering and continuing to go higher.
This does not mean that I do not think we could come back and retest this area. Quite frankly, that would not surprise me at all but it is obvious to me that the Bitcoin market is trying to form some type of floor. After all, the market had sold off quite drastically, so a bit of a recovery does make a certain amount of sense in this type of environment. I do think that given enough time we will probably see an attempt to break out above the highs of the last couple of days, and if we do get that move, it is very likely that we will see the market go marching towards the 200 day EMA which is currently sitting just below the $47,000 level.
Keep in mind that there is a lot of noise out there about the Federal Reserve and the fact that they may be tightening financial conditions, and that of course has found its way into the crypto currency market. This will be especially exacerbated this time around due to the fact that there is so much institutional money in this market now, that is starting to behave more like a traditional asset. I know a lot of true crypto believers do not like that aspect of it, but unfortunately it is what it is and that is the way it is going to be. As long as there is big money in the Bitcoin market, we will continue to see more of a “risk on/risk off” type of situation. If we break down below the $40,000 level, it would trigger a fresh wave of selling.
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