Bitcoin rallied on Friday, catching a wave of bids as the Gamestop-Hedge Fund war continued on, but the primary initial catalyst was Tesla founder Elon Musk tweeting about and adding bitcoin to his Twitter bio, which caused a sudden wave of buying. Bitcoin pushed up to about $39,000 before ultimately turning around and giving back a lot of the gains, closing the daily candle just below the $35k level but still positive on the day overall. I think Bitcoin is trying to form a bottoming pattern if it hasn’t already, but there should continue to be high volatility again next week so we’ll see if there's a continued push into Bitcoin or if this was a bullish fakeout.
(January 29, 2021 7:30PM EST)
Outlook:
Bitcoin rallied again on Friday, initially soaring thanks to Elon Musk's official embrace of Bitcoin which nearly took us back up to the $40K level before turning around and giving back a lot of the gains, but still finishing the day about $1,000 higher. This is a bullish sign as Bitcoin looks to be trying to break the short-term downtrend, putting in a higher high. If we see continued buying pressure through this weekend and into next week, which should be volatile as well, Bitcoin could be ready to continue higher yet thanks to the Gamestop battle.
This comes as no surprise; when we experienced similar volatility and disgust in 2008, there were no alternatives to exit to. Now, in 2021, we have Bitcoin, which actually was created in response to the 2008 crisis in which major banks and institutions were bailed out to the tune of hundreds of billions of dollars. Now, more people are having another awakening moment in which they can tangibly see the corruption and manipulation in which the legacy financial system is operated. Though the battle rages on, we have already seen and will likely see even more individual investors funnel into Bitcoin and crypto seeking a fair and decentralized market that is truly free from manipulation. We are all seeking a deferral from the traditional financial system and, accordingly, created a new one: Bitcoin.
If we see an inflow of even a fraction of the bullish liquidity that has boosted Gamestop and other stocks' prices up hundreds of percent over the past week, then Bitcoin could be lifted to the ATH -- and higher. Today's close above yesterday's high is certainly encouraging. If it continues, we should look for a higher close above $35K and then back up toward $40K. Higher highs is now the name of the game. One thing's for certain; people are fed up with the legacy financial system; it's time to embrace a new one that's been building and growing over the last 10 years.
Primary Views:
I think we surprisingly may be following my original alternate path and have already put in a bottom of this correction. My alternate view, if Bitcoin has already put in a bottom around $29K for this correction, a ~31% retracement from the $42K high, and we are now completing a bottoming pattern that should continue to trade sideways and churn up as we rebuild momentum to go higher from here.
Support: Support at the $30K level which has been tested and seems to have successfully held to date after barely hanging on a few times. If Bitcoin falls below, look for support around $25K, and then $20K -- if we even get there (probably not).
Resistance: Look for resistance at $40K, which we'll probably need to retest a couple times before heading higher. After that, look for resistance around $50K, then every $10K until $100K. Make no mistake; we're going higher, it's just a matter of when.
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