Bitcoin has been vastly oversold due to the fact of regulation concerns from the US government wanting to make a more controlled market just like stocks. For over 2 months, the crypto has fallen nearly 42% from the highs in November, but it looks like it has found a bottom in the $39Ks.
Why Bitcoin Could Swing Up
Although Bitcoin received very little interest in COT data last week, I think it's about to gain a lot of attention soon. With the crazy inflation status for the USD, crypto might become something investors would like to put their money in to. Gold, recently, has been underperforming and moves slow even though it has a bullish bias against the USD, and bitcoin looks like the better play in the coming months. The image below is CPI on the USD.
Until the Fed makes a move, the dollar will continue to look weak. And people are tired of waiting on gold, so why not get in on something that can be more lucrative? It is a risky bet for sure, but now is a time where buying something to hedge inflation will be a key play going forward.
Concerns On Both Sides
Concerns regarding the USD are pretty clear, but there is also an issue being presented in the bitcoin market that needs to be addressed. A technical concern I want to point out is the potential death cross pattern happening with bitcoin where the 50 DMA and 200 DMA intersect and the 50 crosses below the 200. This indicates a bearish move on a technical level, but if we see a swing up from the lows, the two moving averages might cross again signaling a bullish move.
Concluding, I think this this a potentially big opportunity for bitcoin investors especially as we will catch COT behavior later today and where the money is flowing. Interest rates are the biggest concern, but I do think this month and next will be big for bitcoin as the Fed does not intend to raise rates in February at all.
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