Well, the banking crisis has pushed money back into crypto. Bitcoin is hovering around $27,000 - $28,000. My impression is that the remaining holders are people with no intention of selling and therefore the bearish pressure has eased up tremendously since a year ago. Since the start of January, Bitcoin has gone up by almost 70% which is an amazing return. I personally did not expect this and thought we would wait until 2024 to see this type of movement, but it's becoming obvious that the bull run may have already started.
However, I do expect a pullback soon following the 0.25% decision from the Fed. We saw BTC rise from $20,000 to almost $29,000 within 2 weeks following the banking turmoil. My hunch is that was a bet on the Fed lowering rates. The Fed did not. Hence, we saw a quick sell-out which has pretty much recovered, but I think it took out most of the steam from the rally and will probably lead to BTC correcting. There are 4 possible levels:
1) $25,000 which is the last level of support
2) $22,000 - $23,000 where volume was strongest in the last month
3) $19,000 - $20,000 where the bull run started and also where the 200D SMA currently provides extra support
4) The worst case scenario would see $BTC plunging down to $16,000, but I don't really see this happening unless some major bearish event occurs.
TradingView 1D BTC chart with SMA Ribbon and Volume Profile
Still, there are a few main things driving the $BTC market right now:
1. Banking crisis: If people can't trust the conventional financial system, what do they do? They flee to the alternatives! Gold, silver, crypto, especially $BTC have seen a resurgence over the last 2 weeks.
2. We are approaching the next halving. Yes, it is a year from now, estimated on 14th April 2024. However, $BTC starts its rise a year sooner. Look at the halving in May 2020, yet it started to rise back up in Feb 2019, going from ~$3,300 to ~$14,000 in June 2019, before dropping again - we obviously had COVID just before the halving, so that messed things up a bit.
3. We are approaching the end of the Fed rate hike cycle. What does this mean? We've almost reached peak tightening, meaning that the money supply won't be getting further restricted. That means we've gone past the worst and probably hit the bottom (unless we see a stock market crash due to something blowing up in the financial sector, which is possible although probably not very likely)
Basically, I think it's:
- a good place to take profits in the short-term if you feel so inclined
- completely viable to keep holding for the long-term
What do you think? I'd love to hear your thoughts!
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