Bitcoin Testing Key $38.5K Resistance Level
Bitcoin has been testing a key resistance level, $38,500 today, which could mean its price will climb again if it can close above it and sustain that price level. If not, a $30,000 price level could be back in the picture if it drops below support levels. The king of crypto has been in a interesting range lately with bulls seemingly jumping in around the $35,500 mark but with a strong support level at $36,500 as well. Who will win this crypto tug-of-war between the bulls and bears?
Not everyone agrees on the support (floor) and resistance (ceiling) levels and it comes down to what methods you are using to calculate them.
The resistance level is the figure in which there is an oversupply of sellers. So if those holding Bitcoin put in an order to sell when the price reaches $38,500 you can understand why BTC has a hard time staying over that figure. Conversely, the support level is the figure in which there is an oversupply of buyers. The relative strength of a support or resistance level increases when multiple indicators cross or overlap near the same price level. The more you see a price level hit a number of times and fail to breech that figure for very long, the more ingrained that level becomes. The higher the trading volume becomes at those levels, the more the market gets convinced of the importance of that particular support or resistance level. The longer the timeframe that these levels hold, the more relative strength the levels indicate.
At the time of finalizing this article, Bitcoin was priced at $38,490.74, as it has been tough to stay over that key resistance level. BTC crossed the $38,500 mark twice today and both times quickly retreated which is one of the reasons I see this as a key current resistance level despite having a generally bullish day bouncing up from a low of $36,763.
BTC did fend of the Fed announcement last week that it was intending to start raising interest rates, likely to begin in March. More government interference, particularly from President Joe Biden in terms of an executive order on crypto, could put Bitcoin on a downward trajectory and break through support levels. February looks to be the month when we hear the presidents plans for our digital money.
On the bright side, the Crypto Fear & Greed Index is finally breaking out of its "extreme fear" view (a reading of 25 or below) after it permanent residency in that range since January 3rd. The push up to 29 yesterday meant that the index didn't break it's longest consecutive "extreme fear" sentiment since it was first created in 2018. Unfortunately the index was back down to 20 today so plenty of fear still exists in the market. If you are looking to buy Bitcoin, a low figure is often seen as a good time to "buy low".
Financial Analyst and Podcast host Scott Melker recently tweeted "Not really bullish until >$39,600. Have not had consecutive green wks in months, need confirmation. 2 weeks ago was a "bullish candle" as well, didn't work out." That is pretty in-line with many and in reality the $40,000 mark would be a welcome psychological lift for Bitcoin investors. I'm sure he knows a lot more about resistance levels than I do so perhaps that is a better price level to get excited about.
As Bitcoin goes, the rest of crypto is sure to follow so stay tuned and watch these key levels to better grasp where the markets are headed next. I'm focused on that $38,500 level still- what price point has you most intrigued right now?
