It Happens Fast!
It was just the other day that Bitcoin was patiently bobbing around in the low $40K region. Now, we are suddenly in a situation where a full-blown bear market is a reality. Just because there is a 10% bounce today does not necessarily imply that we are out of the woods yet. There are no straight lines up, or straight lines down. Even when the market is in a full-blown bull zone, there will be retracements. This can also be said in a bear market. There may be pumps towards the upside but that does not necessarily imply an actual shift in the trend.
Time Is Critical
The only factor that can confirm if a trend has truly shifted is time. The market needs to recover from quite a heavy sell-off. A bounce always happens, regardless of the direction. Even if the trend is to continue downwards, there will be a notable bounce due to the severity of the dump. It could be the floor and it could not. It could also be a temporary floor, that could later give way. Allowing time to pass enables more data to be collected, as well as the market to normalize. It is important to note that the market is currently in reactionary mode and needs to establish true direction.
All Situations Are Not Equal
That being said, if the market did not already have bearish formations and tendencies, I would be more willing and adventurous to place more hope in this bounce. Due to the fact that we are in the midst of bearish patterns playing out, it would be unwise to maintain a bullish bias. The charts are receiving bearish confluence from the stock market, as well as the FED. It appears that confluence has managed to shift camps and once again, it would be unwise to bet against it without a really good reason.
Unfortunately, there is also the case that the market has been pushing north for some time now. Yes, there has been a serious retracement to $29K during 2021 but for the most part, the market has been pretty bullish.
What If This Is The Bottom?
One could argue that news from the FED has already been priced in, as it is widely expected that interest rates will rise. Furthermore, if for some reason it doesn’t happen, there will be a serious pump. This however is extremely unlikely and should probably not even be entertained. Depending on the severity of the news, we could see Bitcoin become quite at home between $30K and $39K. A break below $30K would however signal concern as there is no real support until $20K. The dump of 2021 can now be seen as a blessing in disguise because it has created current support.
Had the market not corrected last year, what would have happened in this current scenario? Pull-backs are extremely healthy, as they provide support on the way back down.
Can Bitcoin Do It?
If Bitcoin can continue to defend the current level, or at worst the $30K level, then we have a chance to move sideways. A sideways defense with a modest uptick in time. If $30K to $33K can prove to be a bottom, we would have a far less fatal bear market than previously. Bearing in mind, if the top is in, then the upward momentum was not nearly as violent as past bull markets. Relatively speaking, I guess it makes sense that we should experience a milder Crypto winter this time around.
Thankful For The Bounce
At this point, it is way too early to start making predictions but we can definitely start looking at what possible movements could mean for the market. It is however good to have this current bounce, providing some form of alleviation in the short term.
Thanks for the visit and see you next time!