- Bitcoin is attempting to break out of its current range for the third time in a month
- Bitcoin has been largely stuck between $29,000 and $32,000 for a month
- The health of the market is largely a matter of opinion at present
Bitcoin is attempting a third breakout above $32,000 after it finally put in a green weekly candle at the tenth time of asking. Having been in the current range since early May, Bitcoin has failed to break out, with macro factors arguing against such a move. The general consensus seems to be that any surge upwards would be nothing more than a short squeeze before more pain.
Third Time Lucky?
Bitcoin entered the current range after the Terra collapse, trying to break out on two separate occasions but being rejected on both occasions:
While this move has got plenty on crypto Twitter excited, it’s clear that a rejection could occur at the top of the range again, resulting in more weeks of nothing. This leaves us with three setups to look for.
The bullish scenario has Bitcoin clearing $32,000 and using the prior resistance as support, suggesting that a push to $35,000 is likely:
Those who think Bitcoin is destined for further lows might be considering something like this:
Of course, there is the third scenario open to us – Bitcoin continues to range as it has done for a month now:
We can look to the macro environment for a guide on the general sentiment of the markets, where everything is doom and gloom ahead of a possible recession and, more imminently, the Federal Reserve’s next Federal Open Market Committee (FOMC) meeting next week.
What we could be witnessing is a fakeout pump designed to reel in buyers before the market nukes again, which is why it’s best not to jump into the market in such situations and rather wait until a direction is confirmed before taking fresh positions.
Critical Point Coming Up for Markets
It’s easy to see just how precarious the situation is if we look to the total cryptocurrency market cap, where we can see a wedge playing out since the post-Terra drop:
Given that the crypto market has spent the whole of 2022 in a downtrend, logic would dictate that this wedge will be a continuation rather than a reversal, especially with little external reason for such a reversal to take place.
