Bitcoin rallied again on Tuesday, initially falling before bouncing near the end of the day, continuing its bounce off the $10,000 level and closing above the 50 Day EMA. There are a lot of market forces at work here; let's dive in.
(September 15, 2020 8:00 PM EST)
Bitcoin rallied again Tuesday as it continues to find buyers after retracing back to major support at the $10,000 level. This drop appears to have been a response or correlation to the multiple percentage point drop in equities over the past 1-2 weeks, as the S&P, DJIA, NASDAQ, and RTY all dropped 3-5%. Gold also saw continued selling pressure, dropping from near $2,000 to around $1,920. Remember, as more funds, offices, and investors get involved with Bitcoin, you'll see some correlative moves when markets reverse course to risk-off and risk-on. It's very likely that the selling in Bitcoin was smaller funds and offices selling some Bitcoin into rampant market selling to take profits off the table. This is over - at least for now - as equities - and Bitcoin - have rallied strongly off higher highs, resuming the uptrend towards ATH's.
Today's rally could have been largely due to correlation of the at-close equity market action that saw tech catching a sizable bid. Keep an eye on the US Dollar and 10 Year Yields as well, as a strong US dollar and hard money assets like gold (and now Bitcoin) typically are inversely correlated. The US Dollar has recently put in a bottom and rallied, which could put downward pressure on hedges against currencies such as gold/Bitcoin.
Look for support around the 50 Day EMA around $10,700. Next support would be at $10,000, which is a significant psychological level, and the 200 Day EMA around ~$9,426. It's worth noting that Bitcoin has never closed beneath the 200 Week EMA; only wicked beneath it briefly, so as long as that holds (currently ~$6,700), things are upward-looking for BTC.
There are a lot of bullish fundamental developments occurring in the crypto and Bitcoin sphere as more and more marquee investors, fund managers, and even companies add Bitcoin to their exposure for the first time as a long-term hedge against a rapidly-inflating US dollar. Bitcoin is steadily garnering attention for being a wealth-preserving asset, similar to that of gold (but better). That being said, there's no way I'm shorting Bitcoin, only continuing to accumulate. It is very obvious that the equity markets were extremely overstretched and by no measure should be valued anywhere close to sky high levels they are every day, but that is the reality we are in now as the Federal Reserve continues to print money and buy US bonds.
Setting fractional BTC buy orders at consistent increments (whatever you're comfortable with) is a good way to DCA over time, gaining exposure at different price levels and maybe even lowering your averages if Bitcoin spikes down and fills your order.
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