Bitcoin Is Limping, But Is It a Good Thing?
Bitcoin is stuck at a potential resistance level, but it may not be the worst thing for cryptocurrencies.
Traders may be wary of the level around $46,500 because it was support in late 2021 and early 2022. It’s also slightly below the 200-day simple moving average (SMA). On the positive side, BTCUSD is trying to hold the February and March highs around $45,500.
This setup isn’t very interesting in isolation. But put it into context with the broader crypto space and some other trends may appear.
The second chart below shows that
Bitcoin Dominance just had its biggest weekly drop since November. Also notice how little the measure has recovered since tumbling a year ago. This contrasts dramatically with early 2018 (the last start of a crypto bear market), which saw a sharper rebound and a higher low by May 2018. This time there’s been little attempt at a bounce, opening the door to potentially more downside in BTC.D.
Falling Bitcoin dominance means investors are embracing new opportunities in the Altcoin market. Second, newer institutional buyers will inevitably compare digital assets to traditional markets like equities. Taking a step back to view the bigger picture, they may like what they see.
First, analyst forecast that S&P 500 companies will report their slowest profit growth since the fourth quarter of 2020. Second, inflation and higher interest rates could remain a headwind for major technology stocks. Third, supply-chain issues are still a concern – especially with geopolitics threatening the European economy.
Cryptos, on the other hand, may have less risk following President Biden’s executive order on March 9. They may also have a clearer set of positive catalysts as Ethereum progresses toward Proof of Stake, Luna amasses Bitcoin reserves and the Bitcoin 2022 Conference gets underway in Miami Beach.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Traders may be wary of the level around $46,500 because it was support in late 2021 and early 2022. It’s also slightly below the 200-day simple moving average (SMA). On the positive side, BTCUSD is trying to hold the February and March highs around $45,500.
This setup isn’t very interesting in isolation. But put it into context with the broader crypto space and some other trends may appear.
The second chart below shows that
Bitcoin Dominance just had its biggest weekly drop since November. Also notice how little the measure has recovered since tumbling a year ago. This contrasts dramatically with early 2018 (the last start of a crypto bear market), which saw a sharper rebound and a higher low by May 2018. This time there’s been little attempt at a bounce, opening the door to potentially more downside in BTC.D. Falling Bitcoin dominance means investors are embracing new opportunities in the Altcoin market. Second, newer institutional buyers will inevitably compare digital assets to traditional markets like equities. Taking a step back to view the bigger picture, they may like what they see.
First, analyst forecast that S&P 500 companies will report their slowest profit growth since the fourth quarter of 2020. Second, inflation and higher interest rates could remain a headwind for major technology stocks. Third, supply-chain issues are still a concern – especially with geopolitics threatening the European economy.
Cryptos, on the other hand, may have less risk following President Biden’s executive order on March 9. They may also have a clearer set of positive catalysts as Ethereum progresses toward Proof of Stake, Luna amasses Bitcoin reserves and the Bitcoin 2022 Conference gets underway in Miami Beach.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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