Bitcoin initially pulled back on Thursday but then rallied back up towards the $12,000, trading around $11,7500 USD. The pattern of Bitcoin's higher highs should continue in the medium-long term, but after such a strong impulsive candle recently breaking through the $10,000 resistance level, it should be expected that Bitcoin may consolidate at lower prices before eclipsing further resistance.
(Aug 13, 2020 9:00 PM EST)
Bitcoin markets have bounced during the trading session on Thursday, originally falling to the $11,200 level before pushing back up and finding resistance around $11,700. This is around an area above where $12,000 should offer local resistance as it is historically and psychologically somewhat significant, although not a huge inflection point.
Fundamentally, everything is going right for Bitcoin, and there are hints of media attention with recent announcements of business intel firm MicroStrategy allocating 100% ($250 million) of their treasury funds into Bitcoin, and even Barstool Sports founder Dave Portnoy posted a video of him sitting down with Camera and Tyler Winklevoss and buying $250,000 worth of Bitcoin and Chainlink on their crypto exchange Gemini. We suspect this is just the beginning of what should be a punctuated bull run that is already being fueled by capital from high-net worth individuals and even financial institutions.
The $10,000 level underneath should offer significant support with the rising 50 Day EMA and $10,000 being a large, round psychological number to market speculators. Longer-term support should be around $8,900-$9,000 - if that gives way, look for the next fibonacci retracement level; otherwise, the trend may be in trouble.
Ultimately, this market is going higher, maybe not skyrocketing tomorrow, but it should be treated as a buy-the-dip scenario until the short-term trend is invalidated. Remember that Bitcoin's monetary policy is the exact opposite of the world reserve currency US Dollar. While the Federal Reserve continues to recklessly print billions of dollars indefinitely, thereby causing unprecedented inflation, Bitcoin remains fixed in maximum supply, with a scheduled reduction in supply programmatically every four years (the third halving occurring 3 months ago). If you've studied economics 101, you know this means, for fixed- or limited-supply assets like Bitcoin, it should see a significant increase in valuation.
Of course, it goes without saying, especially in crypto, that we could see some type of major sell off, as Bitcoin and its smaller-cap underlings tend to programmatically follow traditional equity markets during significant liquidity events, as seen in the massive March sell-off. With bonds futures bouncing off lows yesterday and today equities forming what may be a double-top from Q1 2020, equities may be signaling more downside pain in the very near future. In the short-term, look for weakness as BTC digests its recent run up to $12,000 and pulls back as it prepares for its next leg up. That being said, based on what the fundamentals and technicals are showing, we have no interest in shorting BTC. In the medium-long term, we’ll be looking to buy dips and accumulate for the next bull cycle, which, as we’ll discuss in coming articles, may have already started.
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Disclaimer: This is not financial advice and should not be considered as such.