Bitcoin showing signs of life
For over year now, Bitcoin has essentially been dead money. The market has drifted all the way from the $20,000 region to the $3250 level. This is a market that has been a one-way trade, but we are starting to stabilize a bit as of late, with a couple of technical indicators perhaps showing signs of hope for those that believe in Bitcoin longer term.
The initial technical indicator that I would point out is the 50 day EMA which is now starting to turn higher and has been showing a proclivity to offer support. As we had been below the 50 day EMA until a couple of weeks ago, the fact that it is now offering support instead of resistance is something that should be paid attention to, because it is a major technical signal. This isn’t to say that we are simply going to start taking out to the upside, but it is the first major signal that we have had in months that suggests that there could be a case being built for buying crypto currency.
Beyond that, the downtrend line that I have marked on the chart suggests that we have broken out, and now could be looking to charge to the upside. This the first time I’ve been able to say this for quite some time, and it’s very likely that we are at the very least looking to stabilize. Stabilization is the first sign of a potential trend change after a major downtrend like we have seen.
The second phase of a turnaround is always the confidence building phase. This is when traders have simply given up, and the true believer step in and continue to accumulate an asset. This can take quite some time, so don’t think that this is an impending break out to the upside necessarily. Quite frankly, this can go on for months, if not years. And after the major bubble that had just been broken in crypto currency, the longer this goes on the better off it’ll be.
Beyond that, this is an area that has a lot of importance going back about two years, so the fact that it is holding is a very good sign. We have the $4000 level just above that of course will attract a lot of attention, but we have poked above there just several weeks ago. Because of this, I think that every time we cross the $4000 level it will become less daunting, and eventually people will simply look at it is just another level.
Obviously, if you are a true believer in Bitcoin you are going to need to practice a lot of patience. After all, if you are looking to accumulate down here you are thinking longer term anyway. You are hoping for a move back to the $20,000 level, although you should understand that it’s not going to happen the way it did in 2017. Not only was that unhealthy, but the reality is that there are a lot of people who have bought Bitcoin between here and there and will be more than happy to get out at break even. This will cause natural resistance all the way up.
Beyond that, we need to find a practical use for Bitcoin. It has yet to be adopted in a wide measure, and in this sense if we rally too quickly, it will