A breakdown below $17,500, something that looks very possible, opens up the possibility of a move down to the $12,000 level.
Bitcoin has done very little during the trading session on Tuesday as we continue to flounder around the $20,000 level. Quite frankly, there’s nothing to move the crypto markets anytime soon, other than bad news. After all, we are in “crypto winter”, meaning that we are at best going to see this market go sideways. There’s no catalyst for Bitcoin or any other crypto to go higher at the moment, and quite frankly that might be the case for several months, if not years.
The big money that really moves the markets, the institutions, have much bigger issues to worry about than idealistic virtues about money. Most of them are worried about things like recessions, or perhaps even economies completely collapsing. Think of it this way: if you had billions of dollars available and had decided to try to make it grow via the markets, it changes your perspective drastically. They do not care about any utility of Bitcoin, because for them it is the same thing as anything else, it is a vehicle to make more money.
One thing to pay attention to is that the chatter on Twitter and other places where the Bitcoin community tends to congregate is about having “diamond hands.” It’s also about stacking and the journey, perhaps even the community. What they are not speaking about is the fact that there’s no use for Bitcoin yet. That’s not to say that there won’t be someday, but the adoption of Bitcoin has been miserable, to say the least. Against that backdrop, it’s difficult to imagine money flowing to this asset when even something as straightforward as stocks in a bank like J.P. Morgan are struggling.
Keep in mind that the Federal Reserve and other central banks around the world will continue to tighten monetary policy, which takes away one of the main reasons that people believe Bitcoin will be valuable. The Bitcoin community has called Bitcoin a lot of different things, including a hedge against inflation, a store of value, protection against central bank printing, and even “digital gold.” So far, it has failed all of these tests.
I think what most Bitcoin Maxis don’t understand is that this is the first time Bitcoin has had to deal with a tightening monetary policy. It’s also the first time it’s had to deal with inflation. We are seeing that it is failing drastically. A breakdown below $17,500, something that looks very possible, opens up the possibility of a move down to the $12,000 level. I think this happens sometime this summer, but in the meantime, it looks like we are doing the same thing we had been doing during the previous consolidation area.