Bitcoin broke out on Wednesday, breaking above the highly-contested and historic $20,000 level and extending all the way up to nearly the $21,500 level before closing the daily candle. The bullishness has continued in the afterhours/Thursday candle, as this breakout obviously shatters the old ATH and provides a renewed wave of bullishness with a powerful impulsive candle. It appears we were right on the money with the consolidation triangle pattern which pointed to an upside breakout. Now, the question is how high does Bitcoin run?
From here, there's no doubt that the trend is up for Bitcoin. With the $20K resistance level in the rear view mirror now, Bitcoin is looking up higher into completely uncharted territory. I think this rally could go as high as $25,000 or even $30,000 before finding any meaningful resistance or reason to sell. Everything is bullish about the crypto space as new institutional investors pile in more and more by the day. What we're seeing is a fundamental paradigm shift - investors are now starting to allocate a small percentage of their colossal portfolios to this new asset that is very limited in supply. As such, the prices should appreciate tremendously.
The overall sentiment and narrative around Bitcoin has been nothing short of bullish of late with institutional names of all shapes and corporate structure lining up to add Bitcoin to their portfolio or balance sheet. As billions more enters the space and Bitcoin's programmatic deflationary monetary policy reduces the supply, the fundamentals and technicals appear to be lining up for a medium-long-term price adjustment -- to the upside. That being said, I'm a buyer on dips. I don't think there's a ton of downside here despite my belief Bitcoin may head a bit lower first before resuming higher. However, I think one year from now, buying under $20K will probably be viewed as "value."
Keep it mind, the Federal Reserve's Quantitative Easing program continues to print money at unprecedented levels, adding nearly another $1T to the money supply this month alone so far. In fact, 22% of all US dollars ever created were printed in 2020. While this inflow doesn't have immediate effects, it doesn't take more than a few months for this cash to make its way into markets -- of which it appears Bitcoin is starting to be one of them.
Support: From here I think $18K should be support as it has a couple of times over the past month, but more importantly will be if this impulsive rally continues on, in which case a pullback to the former resistance level -- $20K -- would step in as a new support level. What a tremendous turn of events. If that's the case, then BTC is ready for another wave higher and puts in a major higher low on the longer term charts.
Resistance: We're in uncharted waters here, but I think now that BTC is well into the five figures, it'll move in either $2,000 or $5,000 increments. Accordingly, my minimal target is $22,000 but most likely $25,000 which is a nice large, round psychological number, or possibly $30,000. From there, we'll look for exhaustive candles indicating Bitcoin is running out of steam and then look for support levels to target for dips to buy. Bitcoin's going higher - no sense in trying to fight this trend.
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