Since hitting its new ATH two weeks ago, bitcoin has been making lower highs and has consolidated, trading sideways basically. Ethereum had a chance to pump during this time, also breaking its ATH just recently, slightly behind bitcoin in timeframe. This has looked bullish overall, and we know that bitcoin is in a long term bullish cycle all this coming year.
However, in the short term, we can see that price has just broken support and dipped further to the downside, with a considerable red candle throughout today’s trading. Right now bitcoin has found support on the 200 MA on the 4 hour chart just above $31k. Let’s see if this holds.
Just below this we have further support around $30000, based on past recent price action where wicks dipped to this psychological big even figure. Also the RSI on the 4 hour has found support at the 30 level on the edge of oversold. Price could well have a bounce back to the upside any time now.
Since the massive parabolic uptrend over the recent past month, traders are presuming that bullish momentum will resume. It would make sense of course, though at this point TA suggests that a slight chance exists of price now going through an extended retracement after the recent pump to new ATHs. On the daily chart today, we are seeing the first big break downward with a rather large red candle.
For the first time since the early December launch of the initial parabolic pump (from the last ATH just below $20k), we are seeing price dip significantly below the 13 and 21 MA. The daily RSI still has some room to the downside before reaching oversold, so more bearish selling would not be unnatural.
Let’s see if $30k can hold for now on this downtrend. A break below would back up the bearish theory for this week. On a fundamental level, the new USA secretary of the treasury is apparently Janet Yellen, who was Fed chairperson in the recent past. And she is openly disapproving of bitcoin and cryptocurrency. She has come out saying that it must be stopped, perhaps even banned. This FUD could be helping the bearish case right now.
The fact is that Yellen has made massive profits from Wall Street and is hugely sponsored by the banks. As a result she is towing the mainstream finance narrative, which is anti-bitcoin. It looks like this could become the battle of the finance world this year, and we have to keep this in mind now under the new Biden administration. Bitcoin is not Ripple by any means, and has been already established as not a security, being decentralized. So we wont see the same court case against bitcoin as we saw with Ripple.
Nevertheless, the Yellen run government treasury looks like it is out to get bitcoin. Even the UK government has come out saying they want to look into banning bitcoin in the UK. Yellen went as far as stating a bogus point of view in her Senate confirmation hearing this week, when she said that bitcoin is mostly used for illicit transactions. This has been statistically proven to be false by the firm Chainalysis. Perhaps only 1% of bitcoin transactions can be seen to be illicit, whereas the dollar is being used for much more illicit activity, without doubt.
So we can see that the government are willing to lie, cheat and steal their way to getting their demands met. This week has been a perfect example. Therefore we need to be wary of this new administration in USA under Biden, They could simply come down heavily on bitcoin and cryptocurrency. Bitcoin is at something of a crossroads now in Q1 of 2021. So many mainstream whale investment firms and even banks are investing in bitcoin, while simultaneously governments are showing signs of wanting to clap down. China has talked of banning bitcoin in previous years, but the coin still marches onward and upward.
Nevertheless, with the current bearish trend in price as well as the FUD and bearish sentiment it’s able to generate, it would not be surprising if we saw a further dip in price in the short term, before bitcoin continues its overall long term bullish trend. In my opinion, the worst case scenario would be for bitcoin to break the $30k support and fall to anywhere from $28k all the way down to the 21 weekly MA around $20k. The dip may be no more that a brief wick, followed by a bounce back up with significant volume as buyers capitalise on some cheap bitcoin.