Bitcoin Continues to Chop Underneath Key Resistance

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  • Bitcoin looks indecisive, having stalled underneath a major area of resistance
  • The concerns over the banking sector appear to have contributed to its slow down
  • If It can cross $28,000 with volume, $31,000 is on the cards

Bitcoin continues to be indecisive as it continues to chop around underneath a key resistance area of $28,000, with no clear signs of where it will go next. If it can clear this area then $31,000 is on the cards, but with on-ramps drying up for institutional investors in the U.S., this might prove tricky. The fear and turmoil in the traditional banking system appears to have contributed to stalling Bitcoin’s bear market rally from $15,500, and a further retest of its prior resistance towards $25,300 seems feasible.

Banking Crisis has Fired Bitcoin’s Run

Bitcoin’s rally from $15,500, which started on the first day of the year, has gone almost unnoticed by the wider world, mainly because of the crisis hitting the traditional banking sector. This narrative has helped propel Bitcoin up to $28,000, but it is here that it appears to have become a little stuck:

BTC1 (2)

Clearly, this next hurdle has proved a tough one to crack, and with Bitcoin closing the week underneath it, there remains the possibility of a pullback towards the $25,300 area, which should act as support after acting as such tough resistance for some eight months. Concerns over the health of the traditional banking sector, which helped fuel the rally, but Bitcoin is now stuck between two narratives – having behaved like a tech stock in recent years will it sell off like these have been doing recently, or will it continue to act more like gold, which has also been pumping over the last two weeks?

A look at a lower time frame shows that price has been forming a wedge since the FOMC meeting last week, suggesting that something has to give soon, perhaps even as soon as today:

BTC2 (1)

One issue facing Bitcoin is the pressure being applied to fiat on-ramps for institutional buyers. Crypto banks are seemingly being targeted by the U.S. government as it tries to strangle the industry, and with large crypto exchanges such as Coinbase being targeted by the authorities, there may soon be hardly anywhere for large scale investors in the U.S. to ply their trade.

Whether this plan by the likes of the Securities and Exchange Commission plays out in the long term of course remains to be seen, but for now, the actions it has already taken and the threat posed to the industry seems to be enough to cause Bitcoin to just check itself.