Bitcoin Remains In Its Box

Killing Time

Bitcoin seems to be rather determined to sit this one out. Unfazed by much of what is transpiring on a global stage, BTC continues to trade in a very boring yet somewhat safe zone. This is what I mentioned to my subscribers on Noise.cash in January. I expected the $38K to $44K level to be “milked” for some time. I later went on to refer to it as the “Bitcoin box”, suggesting that price is trapped and continues to be trapped in this zone. Provided, there have been brief dips below, BTC has managed to regain the $38K level each time. This sounds like a fairly safe trading zone, provided $38K holds.

What If It Doesn’t?

A collapse of support at this level would be rather bleak in my opinion. When you consider that Bitcoin is sitting right at the support level, it actually doesn’t look that safe at all. On the positive side, as mentioned, drops below have been short-lived, only to find support once again at $38K. The problem that arises in a drop below is that there is little meaningful support. The only real solid support is at 32K to 35K, which is why I love and appreciate consolidation and sideways movement. In the future, it comes back to provide significant support.

The BTC price was completely stagnant during May and July of last year, moving within the tight zone of $32K to $35K. However, once time has passed that boring period is now providing the next level of support. If that was not in place, we would be looking at $20K as the next key support.

Patience Once Again

In light of what could happen if support is lost at 38K, sideways action suddenly doesn’t look so bad. I would rather wait it out here and build a solid support level. My “gut” instinct was a prolonged period at these levels and already it has been months. I am not sure how long this can go on but it is definitely better than falling off a cliff. When you look at the percentage margin within this zone, it is still very tradeable, especially with very modest leverage. I recently posted an article in which I addressed the benefits of trading in this current market. There are often some very volatile swings within this range and make for great trading opportunities.

Time To Consider More Exposure To Trading

Trading was something that I reduced Exposure to quite significantly over the past year. Current price action and market activity is beginning to suggest that perhaps I should look at increasing it again. Those who are full-time Crypto will know that many of your income streams have taken a serious knock. Crypto is not like a job where a bad month could see expenses increase by 10% and ultimately reduce your income in “real terms”. If you are farming CAKE and your income is now $2000 per month, it was $12 000 per month at the peak. That’s a massive difference and one is faced with trying to compensate for such a loss of income.

This is exactly why I have always said that you can never become complacent in building more income streams and passive mechanisms. Living below your means and earning more than you require are sure ways to protect yourself from unknown future turmoil.

Somewhat Wonky

There has been yet another inverse head and shoulders pattern forming on the daily and though somewhat wonky, one could argue that it is still valid. The window of opportunity on this pattern is however closing and if we don’t see some upward momentum this week, it is most likely yet another formation failure.

Just prior to this pattern there was an even better-looking pattern that failed on the daily. Two consecutive failures of bullish formations on the daily will not look good. As I am writing, Bitcoin has regained $39K, so there is a fairly decent green daily candle.

Final Thoughts

When it comes to markets there are no certainties and one can only respond as patterns confirm or fail. We do at least have some type of indication but there are no guarantees. Remaining in the box is not that bad, especially if we are above $40K. Let’s hope this somewhat wonky pattern can provide some assistance. I am personally beginning to consider that it will most likely fail but it may just surprise us!

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