Bitcoin is breaking below the sideways range it had been in for the past month. It is also taking it down near its 200 DMA. The 200 DMA provided tough resistance for the cryptocurrency back in April, but once it broke above that level, it skyrocketed. Therefore, if (repeat, IF) it breaks below that line in any meaningful way, it will make Bitcoin vulnerable to a more significant decline. (Yes, it’s a bit oversold, but it got A LOT more oversold in the 4th quarter of last year, so it could easily fall a lot further if it breaks below its 200 DMA.)
We think it will indeed go lower. As we’ve said many times in the past, one of the few real items that gives any government its power is the control over its currency. A widely accepted cryptocurrency would take away a lot of that power. This is why both sides of the political aisle are bashing Facebook over their Libra product in our humble opinion.
We believe the incredibly negative reaction in Washington DC to FB’s Libra…is a sign that Bitcoin is going to face A LOT more headwinds than its bulls though it would…in its goal to become a widely accepted currency. This doesn’t mean it will never happen, but we think it DOES mean it will take a very, very, very long time. As this realization makes its way into the mainstream, it should create another substantial downdraft in Bitcoin in our opinion (especially if/when it breaks below its 200 DMA in a meaningful way). Therefore, we would avoid Bitcoin at these levels…at this time.
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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