Bitcoin rallied on Friday, recovering from yesterday's fall down towards the $11,000 level and settling around the $11,500 level. This area has caused a lot of choppy behavior as Bitcoin seems rangebound between $11,000 and $12,000 for now.
(Aug 28, 2020 8:00 PM EST)
As Bitcoin buyers come in and BTC and as long as BTC can hold onto the $11,000 level, it should set the stage for a run up to $14,000, and then $20,000 and beyond. Today's rally may have been shorts closing their swing trade positions from earlier in the week, or buyers continuing to accumulate. Coincidentally gold also had a bullish day today, rallying over 3%, which seems to be Bitcoin's older stepbrother. The two assets have become increasingly correlated since the March-April market crash, as both serve essentially the same economic and portfolio function.
If today did confirm a local bottom, look for $11,000 to continue acting as support. In the meantime, Bitcoin may slowly form a short-term rounded bottom pattern which indicates support and buyer accumulation. Once the buyers have built up enough momentum, look for BTC to make more attempts at the $12,000 level.
If the $11,000 level doesn't hold as support, there should be major support between $11,000 and $10,000 underneath. This area should offer significant support with the rising 50 Day EMA around $10,650 now, and $10,000 being a large, round psychological number. Remember, we are human, after all (or at least most of us). Longer-term support should be around the 200 Day EMA around $9,240, which also happens to be roughly the 50 Week EMA around $9,027. I don't see a high likelihood of BTC retracing to $9,000 or under, but if there is another significant liquidity event in the equities markets a la COVID wave 2, Chinese trade war, etc., Bitcoin could re-correlate for a short time and candlewick down to $8,000 or even $7,000 before buyers step in for bargain prices and a sharp recovery.
Ultimately, this market is going higher and remains on a buy-the-dip scenario until the trend changes, which I don't foresee happening for at least a couple years. Quantitative Easing and infinitely inflating the fiat market with more paper money does not have an instantaneous effect; although, it has not taken long to start to have an impact on Bitcoin. One thing is for certain: 2020 is the ideal macro economic environment for Bitcoin and Crypto as a whole to mature and showcase its value in a fundamentally flawed fiat-based financial system. In fact, it is precisely economic crises such as this one we all live through every day that pseudonymous Bitcoin founder Satoshi Nakamoto conceived the philosophy of a decentralized, immutable, fungible, fixed-supply asset like Bitcoin. Staying on the sideline just isn't possible anymore; there will only be winners and losers, and winners will be made (or enriched) by owning hard assets, such as real estate, commodities, precious metals, stocks, Bitcoin, and Ethereum.
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