Bitcoin fell again on Tuesday, initially rallying just over the $45K level before pulling back, closing the daily candle around $43K. Afterhours we've seen BTC drift to a lower low, now within striking distance of major support at the $40K level. If BTC breaks below this level, all eyes will be on the 200 Day EMA just below; else we have to consider a change in the overall trend.
(May 18, 2021 9:30PM EST)
Short-Term:
Fundmentally, nothing has changed so we remain bullish and have been buying on dips (as has MicroStrategy, Square, and hey, even Tom from MySpace). There has a bearish turn in sentiment lately a la Elon Musk, IRS, etc. These things are expected and recurring, but generally short-term noise and nothing more. That being said, we are approaching a major support level at $40K where there should be a ton of buyers to get Bitcoin 35% off. This is a particularly vicious correction which might actually be mimicking the June 2017 selloff in which Bitcoin dropped from $3,000 to $1,800, a 40% drop, before rallying to $5K a couple months later and then 4x that in December. When in doubt, zoom out.
I am a buyer on dips and continue to do so as BTC is likely near a local bottom and should make a major move higher over the next few weeks. Why? Look at the BTC Dominance chart below.
BTC.D
We're now roughly at the 2017-2018 bull market peak for altcoins, just a few weeks after Bitcoin put in its previous ATH at $20K. This is a major support level for BTC.D, indicating we are experiencing the peak or conclusion of another altseason. This gives us confidence that BTC is close to bottoming out before it bounces on the BTC.D chart. Notice the amount of bullishness and smart money buying BTC over the past few days as capital rotates from altcoins back into BTC. It's scary to buy in moments like these as you may be catching a falling knife in the short-term. But do you think anyone who bought during the March 2020 selloff cares now if they bought at $5,200 instead of $4,800?
Support: $40K, then 200 Day EMA around $37K.
Resistance: $60K, then $70K, $80K, then $100K.
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