Bitcoin very quiet and that’s a good thing
Bitcoin was very quiet during trading session early on Tuesday, and that’s a good thing. The main reason I say this is that we have the Federal Reserve meeting on Wednesday, and this shows that the Bitcoin market is paying attention to the other side of the trade here, the US dollar.
Federal Reserve influence
The Federal Reserve has influence on this market, as they will have an interest rate decision on Wednesday, which is expected to be a cut of 25 basis points. While that isn’t much of a surprise, the question now is whether or not they would sound dovish going forward. If the Federal Reserve, right along with other central banks around the world, are looking to cut interest rates going forward, then it means that fiat currencies will suffer. Asset such as Bitcoin will gain in that light. (Ironically, so will gold, much to the consternation of those who like to argue between Bitcoin and gold being stores of value.)
If the Federal Reserve looks likely to continue cutting interest rates, that will drive asset prices higher as people try to dope US dollars. Ultimately, this is just one reason why Bitcoin may continue to go higher.
There are several places in the world right now where people are trying to send currency out of the country. The first place of course is China, but we are starting to see other countries around the world send flows into the crypto markets such as Venezuela. Essentially, one thing that crypto seems to be very good for is to hide money from authorities. While that can be criminal activity, sometimes it’s just a simple matter of protecting your own wealth in a situation like Venezuela. We are starting to see more and more scenarios like this.
The technical analysis is rather straightforward in this market. We are simply walking along an uptrend line, and dancing around the 50 day EMA, both of which should be supportive. With that in mind, it makes sense that the buyers will probably return, especially if the Federal Reserve does exactly what you think it will do, crush the greenback. If we can break above the candle stick from the Tuesday session, it would show fresh money coming into the marketplace and try to reach towards the $12,000 level. Obviously, there is also the alternate scenario.
The alternate scenario is that we break down below the Tuesday lows, crushing a short-term double bottom. That opens the door to the $8000 level underneath which should be rather supportive as well. Yes, that would break an uptrend line, but it would also simply be a pullback to the $2000 levels that this market seems to be so attracted to as of late. All things being equal, as long as we can stay above that $8000 level this market should still be bullish. After all, we have the blue 200 day EMA underneath on the chart trying to reach towards that level to offer that support.
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