Bitcoin pulled back again on Wednesday, initially falling to nearly the $17,500 level before turning around, recovering to just below the $18,500 level. This is, of course, a short-term bearish development, with a lower low, bearish intraday price action, and a negative close on the daily candle.
I don’t think this selling is over yet, and I don’t think we find any meaningful support until the low $16,000s. Fundamentally, there’s nothing troublesome for Bitcoin, aside from the same old, increasingly unlikely probabilities that governments ban Bitcoin or the network is taken down. I’m not a seller, only a buyer on dips. Red days are followed with small DCA orders, and drops to targeted support levels are larger DCA opportunities.
Based on the gargantuan consistent buying pressure from Wall Street and the likes of PayPal, Square, and MicroStrategy, I think ‘catching a falling knife’ with Bitcoin at this juncture is like catching a butter knife - it might be a little painful for a moment, but will quickly heal and make you look impressive. Throw in at least another round of QE and trillion dollar stimulus, and Bitcoin’s downside is very limited from here. As the Winklevi said, ‘2020 and QE hasn’t changed anything about our view on how well Bitcoin will do, it just accelerated the timeline.’
Support: I'm looking for continuation on this short-term pullback, most likely retesting the $16,000 level as support. Below that, $15K and $13k - 14K should provide strong support levels for a powerful bounce higher to resume the uptrend. Bitcoin's in a defined uptrend; I'm not challenging that, nor selling Bitcoin; I'm looking to add value on pullbacks.
Resistance: $20,000 is long-term resistance and has been for nearly three years now. Bitcoin’s not far off, but I think in the short-term, the path of least resistance is lower. Ultimately, I suspect 20K will be breached by no later than Q1 2020, then we’ll be talking $25,000, $30,000, and higher.
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