Bitcoin Poised to Roll Over as Narratives Build Up
Reading Time: 2 minutesBitcoin looks poised to revisit the $21,000 region as various narratives combine to drive it down
It has already started the week back in the middle of a seven-month range
U.S. economic data and FUD over MtGox payouts are two narratives that could usher in a bloody March
Bitcoin looks poised to roll over and retest the lows of its current range as a busy week of narratives begins. Having been rejected by the 200-week Moving Average (MA), Bitcoin has succeeded in putting in a higher high but not a higher low, leaving it starting the week underneath the middle of the current range. With the lots of U.S. financial data coming out this week and later into the month, and the narrative over the release of MtGox bitcoin, there could soon be some more bargain bitcoin to be had.
Bitcoin Echoing Other Bear Markets
The clearest way we can look at the current state of Bitcoin is through the Bitcoin Cloud Indicator, which is showing exactly the same pattern as in previous bear markets:
Having broken above the 200-day MA at the end of January, it now looks as though the momentum has run out and we are about to see a repeat of 2019/20 where Bitcoin needed two or three such rallies before a bull market proper could begin. This is indicative of a bear market rally followed by accumulation.
Bitcoin’s perilous situation is reflected in the weekly chart:
Bitcoin did not react well to hitting the 200-week and 50-week MA’s, dropping back down to the middle of the range, where it has started the week. The fact that it couldn’t put in a higher high to match its higher low is reflective of the awkward position it now finds itself in, having failed on multiple occasions to break $25,200.
U.S. Data and MtGox Payouts Contributing to Negativity
Bitcoin is certainly finely poised at the moment, and it’s not clear which way it’s going to go. Therefore we have to look and see if any narratives might drive it this week, and we can look no further than the fact that we will be getting major decisions with regard to the U.S. economy this week with the jobs report and later this month with a potential interest rate hike in the offing if the data isn’t suggestive of a reduction in inflation.
Add to that the FUD over MtGox bitcoin payouts starting this week (they’re not) and you have the perfect recipe for a lower Bitcoin price in the coming weeks.
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Filed under: Bitcoin - @ March 6, 2023 9:27 am