Bitcoin approaches its moment of truth

Bitcoin approaches its moment of truth

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With a monthly close less than a week away it’s make or break for Bitcoin. 

A bearish narrative

A bearish narrative is playing across the world’s press and social media channels. The message from the U.S. Federal Reserve Chairman Jerome Powell in the recent FOMC meeting is that another rate hike is on the cards for this year, and rate cuts are being predicted further out into next year.

The price of oil continues to rise towards $100 a barrel as both Russia and Saudi Arabia significantly cut their production, and the war in Ukraine shows no signs of abating. 

Stock markets are heading lower. The S&P 500 and the Nasdaq have made lower highs, and it’s only a handful of gigantic companies such as Amazon, Google, Microsoft etc. that are in any way keeping U.S. stocks afloat.

The U.S. dollar is on a tear upwards as what is perceived as the least dirty shirt in the laundry basket becomes some kind of a haven from the potential carnage in assets. The Dollar Index (DXY) is only a smidgen  away from making a higher high if it can press through resistance at 105.7.

Bitcoin holding but …

With all this negativity Bitcoin is still holding above $26,000, and has been at this current price level for the previous 6 weeks. It still traverses along the bottom of the channel it has been following since September of last year.

Bitcoin has spent these 6 weeks underneath its 200-week moving average and the likelihood of it falling downwards out of the upward channel is greater than piercing it to the upside.

With all this in mind, Bitcoin could head back to the top of the channel, which is currently at around $33,600. Many might say that this is unlikely, but Bitcoin could soon have momentum from the Stochastic RSI on the weekly, and should there be enough upward price action before the end of September, a cross down on the monthly Stochastic RSI can be avoided.

A contrarian view

Raoul Pal, investment strategist and co-founder of Real Vision, has a contrarian view on markets. He believes that liquidity is all-important, and that central banks are in cahoots with a 4-year interest rate cycle. He states that central banks will ease and cut rates going into next year, and that this new interest rate cycle will be what drives Bitcoin into its bull run.

He has the view that the best assets to hold for this coming cycle will be crypto and tech stocks. Either Bitcoin suffers as world economies fall into recession, or Pal is right, and Bitcoin leads all assets higher. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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