Hey all,
Today I woke up with not-so-surprising news on my screen. At this very moment I am noticing 97 of the top 100 coins on CoinMarketCap to be in the green as of their 24 hour value. The reason I say this isn't surprising is because of the level of support Bitcoin had at around mid $7,500. Sure in recent days, we've seen Bitcoin fall right through strong support levels, but we have to consider two things:
- The Strength of the Support
- The Psychological Barrier
I want to talk more about the psychological barrier at play currently in Bitcoin's market. Fear not! My first point will talk about more on the qualitative side of the strong support we see within technical analyses. There are two levels of the psychological barriers I want to mention:
- Psychological Barriers of Current BTC Investors
- Psychological Barriers of Sideline Investors
Bitcoin has been taking a beating, with talks of countries banning crypto investing, banks barring wiring to exchanges / usage of cryptos in general, etc. With all of this bad publicity, how do we transfer this to the charts? I personally believe the best indicator for this type of qualitative analysis to be the levels of support and resistance. I say this because I see these levels as sort of a "checkup" to see how the public is currently valuing our market. The support levels either fail or bounce, whichever will win out. Same goes for resistance, it will either break or fail. Since we have been in a bearish setting, I will talk about the support levels. As the price of bitcoin continues to fall, what will be the bottom support level that we will witness before we see a reversal? It shouldn't be a surprise that we made it as far down as $7,500. Based on many alternative technical analyses, we could've seen the price fall to $5,000. However, current bitcoin traders found that $7,500 was a strong support level, and started supporting even more. You can see this through the heavy trading volume met at this level, one of the highest volumes we have had since mid-January.
As you can see at this point in time, we will have many resistance levels to re-break. So now we wait to see how strong bitcoin can hold at these levels.
Another part to the psychological barrier I wanted to mention more catered to the sideline trader's view on Bitcoin. The main problem they see is that Bitcoin is very volatile and has little to no known regulatory features to its name. However, and I turn to CNBC as my source for this:
“Next week we’ve got a big event here in the US, we’ve talked a lot about the regulatory pressures that have come from South Korea and from China and other places. But we’ve got something coming up in the US that I think could be a big event for us. So on February 6th the Senate Banking Committee are having a meeting and they’re going to be talking about what the regulatory oversight role of the SEC and the CFTC should be when it comes to cryptocurrencies and virtual currencies. The bullish part of this is it could give some regulatory clarity".
What this source shows is people may be trading and sideliners could be entering based on their anticipation of good news come Tuesday.
For now, all we can do is continually read up on the current news and react to technical indicators and see ultimately what happens. Do I believe the price of bitcoin will continue to rise? In the short-run, I do. How much is always the question of uncertainty. I believed $10,000 would be the lowest value we'd see in this bearish blood bath, but the market always wins out in the end and you have to be prepared for that. Bitcoin among other cryptocurrencies have a lot to recover and many resistance levels to break through. It'll be exciting year to see how this all plays out. This is truly a year for the record books.