Bitcoin tracks sideways at resistance

Six days into Bitcoin pushing against the all-important $25,000 resistance, and nothing is giving yet.

Three likely scenarios

The scenarios are pretty clear. Bitcoin probably does one of three things. The first 2 bull cases are that bitcoin breaks through the resistance in the next few days. The other is that bitcoin trends sideways in a range for an indefinite period before piercing through, and the final bear scenario is that the price breaks down and bitcoin falls precipitously down to below $20,000.

Probably for many analysts the bear scenario is the most popular, and actually, this wouldn’t be a bad thing long term for bitcoin either. It would perhaps enable a retest of the base and provide the building of much better price structure going forward.

Bitcoin a good longer term risk

Many indicators are suggesting that the bitcoin bottom is in, and even if it isn’t, there really must be far more upside compared with downside to come going into the bitcoin halving event.

For today, so far at least, bitcoin has taken a slight leg down. However, the price is holding at around $24,600 which has become one of the levels of support for bitcoin’s assault on $25,000. 

China effect on crypto

1% down isn’t too much in the grand scheme of things although it has also had its effect on the rest of the crypto market, which has generally fallen a little further with the exception of some of the Chinese cryptos.

China recently injected the equivalent of over $72 billion into its economy in order to give it a boost following the ending of Covid restrictions. Some of this extra cash found its way into the crypto market and helped bolster the overall market cap.

More liquidity globally than in the US

In fact, given that crypto is a truly global market that is available 24/7, the Federal Reserve and its ongoing monetary tightening regime is probably very much diluted by the opposite effect of other nations like China that are stimulating their economies.

As the Fed continues to ratchet up interest rates in an endeavour to stop spending, and to get a hold on inflation, other economies around the world have got to the point where they need to do the opposite. 

It can certainly be argued that China and Asia can have a bigger impact on crypto than the US. Therefore, this needs to be just one more element that should be taken into account when analysing whether crypto will continue upwards or whether it will suffer a rejection.