Bitcoin has been rallying for the last several days, as the market is now above the $30,000 level. This is obviously an area that is a large, round, psychologically significant figure, and an area that the market had consolidated in during the month of May 2022. Because of this, there is a significant amount of “market memory” in the area, so it may cause a little bit of hesitation.
The triangle that Bitcoin broke out of has already reached its measured move, so therefore it is likely that the market will start to look for more reasons to go higher. Whether or not it finds them remains to be seen, but the most obvious catalyst would be a shrinking US dollar. While that seems to be a bit of a moving target, the reality is that Bitcoin is up about 80% year to date, so it’s obviously doing quite well recently. However, there are some traders out there that have been hanging on since $60,000, so obviously they have a lot of issues.
Underneath, the $25,000 level should be a hard “floor in the market”, as long as bullish attitudes can prevail. Anything below $25,000 would have to be looked at as a major barrier sign. While it is very unlikely to happen, it is something to keep in the back of your mind. The 50-Day EMA has broken above the $26,000 level and is rising. A lot of this is going to come down to risk appetite, and as traders around the world continue to bet that the Federal Reserve is going to cut interest rates, it has been helping Bitcoin. That being said, the Federal Reserve remained steadfast in its argument that it is going to stay tight, so expect more volatility. Nonetheless, it looks as if Bitcoin has just finished a massive rounding bottom, and now we could be on to the next phase, be it bear or bull.
If the market takes out the 32,000 level to the upside, it will clear that major consolidation from last year, opening up a potential move all the way to the $38,000 level. If the market were to turn around a break below the $25,000 level, it provides a relatively straightforward path back down to the $20,000 level.
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