Bitcoin and the crypto market continue to rise as an extremely nervous stock market goes in the opposite direction. Is the latest Bitcoin rally about to run out of steam?
Bitcoin reaches significant price level
Another surge from Bitcoin early on Monday took the king of the cryptocurrencies to the heady heights of $31,000 and to the very brink of breaking that resistance.
However, over the last couple of hours that price has returned to sit on the support at $30,550. It remains to be seen, at least for the rest of this day, if bitcoin will challenge the $31,000 level again.
For the short term bitcoin is still in danger of succumbing to the classic head and shoulders chart pattern that has formed. A move upwards beyond $31,800 would have been required for the alpha currency to nullify this pattern and in so doing make a real attempt to break this huge resistance.
The trend is your friend
Looking at the higher time frame, things still look quite promising for Bitcoin. The old adage of “the trend is your friend” is very much still the case. Since the low was formed for this cycle at around $15,500, a series of higher highs and higher lows have been repeated. It just remains to be seen if the next higher high can be attained.
Stock market propagates fear
Be that as it may, the poorly performing stock market must be causing some drag on crypto. It is possibly the case that crypto traders are fearfully casting an eye at stocks to see whether the latest breakdown can be stopped.
There is clear support below the 200-day moving average for the S&P though, and this could act as a safety net, catching the price and potentially propelling it higher again.
As the market enters levels of extreme fear and comes down to a key level of support, this can be seen as an opportunity for those wishing to go long.
Short term pull back?
Back to Bitcoin, and for the short term, there does appear to be a number of factors that are pointing towards a rejection of $31,000. Looking at the liquidation levels on the Hyblock Capital website, around 460 longs can be liquidated as opposed to only 90 shorts, signifying a more likely take out of the long positions.
Relative Strength Indicators (RSIs) for the short term are all oversold so it would really make sense to see a pull back here. However, who knows what the market will do. Those trading should be ultra cautious.
Opinion
It might be argued that Bitcoin is an asset to slowly accumulate over the time frame of years. Fiat currencies are heading for much more debasement, therefore accumulating scarce, hard assets is quite possibly the way to go.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
