Bitcoin breakout coming – is it up or down?
Down 4% so far, Bitcoin is having a down-week. Could this current fall in price start to snowball as investors lose hope and start to sell, or is Bitcoin going to surprise the market once again and break free of the shackles of the last 14 weeks?
Bears in control for now
There is plenty of bearish sentiment around in the press and on social media regarding Bitcoin. Just to begin, there is the fact that hedge funds have built a massive short on the CME, while at the same time going long on spot Bitcoin through the ETFs, having the effect of damping down any upside moves. The hedge funds make a nice percentage from the spread between the two, which is called the “cash and carry trade”.
There is also the drag on price that comes from the miners selling. Now that the halving has taken place, a lot of the rigs that the miners use are not able to cope with the new demands, and therefore they are forced to buy new models and spend more of their BTC reserves on them, thereby adding to the BTC sell pressure.
And then of course there is the continuing anti-crypto stance of the Biden administration, and the governmental market watchdog, the Securities and Exchange Commission (SEC). The attacks on crypto are on-going, with the SEC constantly embroiled in court cases with crypto entities, while the Biden administration does its best to promote anti-crypto legislation.
Still the hardest monetary asset on the planet
In the face of all this, Bitcoin remains the hardest monetary asset on the planet, with a fixed supply and known issuance – completely outside of the control of any government.
Source: TradingView
When looking at the macro picture for Bitcoin, it really does look good. Yes, the $BTC price could still descend below the $66,000 support level, but if the price remains in the bull flag it is likely to be bought back up, given that this is a very bullish pattern.
Money printing on the way
Finally, from an economic perspective, the Federal Reserve Chairman did just say that there would perhaps only be one rate cut this year, but global liquidity is still on the rise, and the US debt is ever-present, and growing rapidly. The interest has to be paid, and that will involve vast amounts of money printing. Bitcoin thrives in this kind of environment.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.