Bitcoin has had a tough couple of sessions, dropping rather rapidly last week into the area that the market is currently trading. That being said, Bitcoin had recently had a nice run higher, and is now threatening a trendline that has been important since the beginning of the year. Furthermore, underneath that trendline we also have the 50-Day EMA, which of course attracts a lot of attention.
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The impulse of candlestick from the end of last week certainly suggest that we are starting to break down, and we are almost to the point where we are threatening structure from the low that Bitcoin made in February. Breaking down below the 50-Day EMA should bring back quite a bit of momentum, perhaps down to the 200-Day EMA, which currently sits at the $20,250 level. That of course is an indicator that a lot of longer-term players will be paying close attention to, as the indicators quite often used to determine the overall trend.
It’s also worth noting that the $25,000 level above did offer significant resistance, and on longer-term charts is a crucial figure. At this point, it’s very interesting the setup that we find ourselves in, because we are right in the middle of the inflection point of the uptrend line, the 50-Day EMA, and of course monetary policy coming out of the Federal Reserve. As long as that remains tight, risk appetite will continue to be a bit of a headwind for crypto in general, with of course Bitcoin being the bellwether for the entire industry. Not only will Bitcoin drop if we break down below the 50-Day EMA, but it’s very possible that most other cryptocurrency markets will as well.
As far as a bullish position is concerned, at the very least the market will have to hang on to the uptrend line. More impressive would be a move above the $23,700 level, completely wiping out the last negative candlestick from last week. In that scenario, Bitcoin would more likely than not go looking to the $25,000 level where an even bigger fight awaits.
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