Right now I think we have more of a back-and-forth situation ahead of us.
The fact that we are forming a shooting star suggests that we are going to continue to see selling pressure, but I also see that the $22,500 level is a minor support level, followed by the 50-day EMA. This has been a nice grind to the upside, and quite frankly that’s exactly what you want to see in Bitcoin because there have been so many negative traders out there that the market just squeezing higher slowly shows that we are building up a bit of confidence. However, there is a severe lack of volume and that is probably the one thing that concerns me.
I think we are essentially in a major “crypto winter”, but that doesn’t mean the end of the world. In fact, we have seen this before so it does make a certain amount of sense that traders will look at this through the prism of possibly being able to build up a bit of a bigger position for the good times. I think that it is probably only a matter of time before we see some type of attempt to grind much higher, but we need some type of catalyst.
Without a doubt, the biggest catalyst is going to be if and when the Federal Reserve decides it is going to loosen monetary policy. There is a lot of expectation at the moment that the Fed is going to be forced to be less aggressive with monetary policy, but with inflation as high as it is, I am a bit hesitant to get that excited quite yet. In other words, I think we have some work to do as we go back and forth and try to establish some type of foothold. A move below the 50-day EMA could have Bitcoin reaching down to the $20,000 level. However, right now I think we have more of a back-and-forth situation ahead of us.
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