$25k Bitcoin incoming?
Three weeks ago, I wrote that Bitcoin seemed to be on its way to $32k. Slowly, we are getting closer, but Bitcoin has been struggling in the past few weeks. The price is fluctuating around resistance, and I think it's more likely that Bitcoin - and thus the rest of the crypto market as well - will first correct before reaching $32k. You can read why in this (a little technical) newsletter.
Resistance
As you can see in the image below, one month ago Bitcoin broke out of the range it had been moving in for almost a year. We are currently on our way to the bottom of the next range, around $32k - $33k. The range in which Bitcoin fluctuated throughout 2021 and a large part of 2022.
But in the past few weeks, Bitcoin has been struggling, and the likelyhood has increased that Bitcoin will "test" the top of the previous range first - around $25k - before it can push for $32k.
This seems all the more likely as not only Bitcoin, but many different markets are approaching important resistance levels. For example, the chart below shows that Ethereum is nearing the important $2,000 level.
And this is not only the case in the crypto market. The price of gold has also risen sharply the past few weeks and is now approaching its all-time high, which is normally a strong resistance level.
You might wonder why a potential drop in the gold market is relevant to Bitcoin. That’s because the strength in correlation between gold and Bitcoin has surpassed the strength in correlation between the S&P500 and Bitcoin. As a result, a correction in the gold market may be accompanied by a correction in Bitcoin.
Moreover, the Dollar Index is approaching its most important support level. And as there’s a strong negative correlation between the "strength" of the dollar and Bitcoin, a (temporary) revival in the dollar, would therefore be bad news for Bitcoin.
Although I think Bitcoin, Ethereum, and gold will break through their resistance levels this year, there is a good chance that we will see some corrections across the board first.
Good luck!