BTC seems strong as hell. Is it one big fake out?
As of this writing, BTC sits above $22k, a five-month-high. Is Bitcoin on the trajectory to reclaiming its previous high, or is this a dead cat bounce?
In November 2021, Bitcoin peaked at $69,000. Since then, it’s been a bloodbath. The latest blow came a year after its all-time high, with the FTX fiasco.
At the time, it seemed like crypto was dead in the water. But the bulls are back, and the price has already regained the resistance level of $17k that the Sam Bankman-Fried meltdown created.
Last year, BTC lost most of it’s moving averages, which is always a very bearish sign. Then, it reached the kiss of death.
BTC’s next level of resistance is $24k, which happens to be the level of its 200 weekly moving average. If it can capture that and consolidate, things look bullish.
With inflation, high interest rates, and the crypto and equities bloodbath, the current economic picture is bleak, although indicators say it's getting better.
But the Fed is not done with quantitative tightening. With more money to be sucked from the economy, it’s tough to see where the multi-billions of dollars needed to fuel a continued upward trend will come from.
While the economy is seemingly improving, if cloudy forecasts deliver, crypto will have no choice but to follow.
Yet even with the collapse of Genesis, Bitcoin shrugged it off. After FTX, the fear of another exchange collapse was palpable, and it was forecast it could send Bitcoin’s price down to $12k or lower.
But the world’s largest crypto has remained resilient. For now.
On the daily chart, BTC’s rebound is impressive.
It has weathered collapses from two exchanges. It’s storming forward amongst dire economic forecasts. While the rebound up to the FTX level is impressive, it has yet to prove itself.
If you zoom out further, the entire picture becomes clearer.
What this could be is a face-melting rally, a phenomenon infamous (and common) of bear markets.
Since the Kiss of Death back in October 2022, market experts have been calling for a rally, and it’s been delivered.
These face-melting rallies often trick bulls into thinking the bottom is in, just to have the floor beneath them disappear.
CONCLUSION FOR WTF WILL BITCOIN DO NOW?
Investing advice often instructs not to follow the herd, and for perhaps a small but vocal twitter minority, the herd is scared. 2023 looks like a tough landscape for markets of all sectors, so perhaps now is the perfect time to buy.
But I think it’s more likely this is an ABC setup for a bull trap. Watch closely. Bitcoin is unconventional and never fails to surprise, but only continued positive price action can prove its strength.
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WTF Will Bitcoin Do Now? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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