Crypto winter is finally over!
That was the headline back in early 2023.
Less parabolic than the previous runs, this rally also came with the introduction of spot Bitcoin ETFs. Bitcoin ETFs on the stock exchange offer easier access and exposure to the new “gold of the millennium”. This rally was billed to be more sustainable and less speculative.
Yet, the $75k ceiling remains out of reach for now. As of now, we are more than 20% down from Bitcoin’s peak of around $70k.
Is it different this time?
Understanding and ways to analyse BTC price movements
At least this time round, I see a less fundamental push on how BTC is going to change and revolutionize the world. How things have changed for the most hardheaded crypto bulls.
I too, have changed as years go by. Yes, I still don’t think you could write a book that preaches the fundamentals of how BTC can change payment methods today, as of now. However, I have become more receptive and open to whatever assets can provide returns beyond average market returns. As long the initial approach and game plan are solid, any investor can profit from different types of investments and asset classes.
Since BTC holds little fundamental playbook from an application point of view, the short to midterm strategy is always to look at the technical aspects and its receptiveness by the regulators.
What do the technicals say?
Using Bollinger’s Band, it still looks bearish with more room for correction in the coming weeks. BTC prices continue to touch the lower bands and remain under the middle envelope.
This suggests that the downtrend momentum is still ongoing. The middle envelope shows an evident downtrend. If prices do breach the lower bands, heavier selling could kick in.
The simple 30-day moving average also suggests that this bull run has ended for now. Current price levels are also below the 60-, 90-,120- and 150-day moving average.
What are the support and resistance levels to take note of?
So if the trends suggest a current downtrend for BTC, traders or investors would be interested in the next question – what are the immediate support and resistance levels?
Using Fibonacci retracement as an illustration, $55k is the next support level, while $59k or close to $60k presents the immediate resistance level.
These 2 levels are also by chance either the mid-point or the end point of $55k and $60k.
If downward momentum pressure builds up steam, we could see BTC dropping to the next support level of $50k. And if we are looking at yet another major selloff event, expect prices to even drop to $37k.
What are the latest news surrounding BTC currently?
Mt. Gox, the now-defunct cryptocurrency exchange that used to be the biggest back then, is on the news again.
A prolific heist of BTC back then caused Mt. Gox to file for bankruptcy. As of today, the rehabilitation trustee has started making repayments to creditors 10 years after the notorious event.
Some analyst opines that with an additional 200,000 BTC entering the market, demand will be outstripped, potentially causing prices to go lower.
And then there is the usual news where tech billionaires or ETF fund managers creating news headlines for BTC to replace the US dollar as the de-facto currency.
My unbiased view on BTC
I never have been a good practitioner of Technical analysis. I know the theory and know how to apply it as and when needed.
I believe the support and resistance levels exhibited hold grounds for the short term.
In the mid to very long term, I see very little threat for BTC to implode. The risk was there during the nascent stages. But with almost 5% of BTC currently held by ETFs, it would take a major black swan event for BTC to lose its perceived value.
The likes of Jack Dorsey and Cathie Wood would always repeat their greatest wish: having BTC become the de-facto currency of the world.
It would be an oxymoron. A currency needs to be stable. And volatility helps to reap massive gains.
And seriously, do you think the US would cede the power of its greatest leverage? It would require a cataclysmic event to trigger a distrust of the USD around the world, and for everyone to agree on the next currency to crown as king instead of the USD.
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