Bitcoin looks horrible. It’s originally trying to take off to the outside during the trading session on Wednesday, as Fitch downgraded US debt. There was an initial knee-jerk reaction for Bitcoin to benefit from this, but that has since been obliterated, and the market has drifted back down below the 29,500 level.
Whether or not this leads to something uglier remains to be seen, but I do think you have to look at this through the prism of how it’s not taken advantage of the overall situation. The US dollar continues to strengthen, despite the fact that there has been a major debt downgrade, so this tells me that the Bitcoin market will probably continue to struggle. The $30,000 level has been a thorn in the side for Bitcoin bulls, and this will continue to be a scenario where you have to look at this through that possibility. If we do break above the $30,000 level, it’s possible that you could see market participants really jump into the fray and chase the “FOMO trade”, but right now it just does not look like crypto has a lot of momentum.
Potential break below 200-EMA could spell huge blow to Bitcoin
On the other hand, if the market were to break down below the $20,500 level, then it’s possible that Bitcoin goes looking toward the 200-Day EMA underneath. With that, I think you’ve got a situation where the market participants will continue to see this through the prism of whether or not they can find value, but breaking below the 200-Day EMA would be a huge blow to the Bitcoin markets.
All things being equal, it’s likely that there’s a lot of volatility over the next couple of days, especially as the Non-Farm Payroll announcement comes out of the United States on Friday, which of course will move the US dollar, which does cause a bit of a “knee-jerk reaction” in this market. All things being equal though, the reaction that we have seen on Wednesday is not a good sign for any sustainable rally at this point in time.
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