This is a bit ironic, because most true believers of Bitcoin believe that they are operating outside of the “traditional financial markets”, but the reality is that Bitcoin’s best friend is the Federal Reserve.

• The BTC/USD market has done very little during the trading session on Thursday as we continue to hang around the 50-Day EMA.
• Ultimately, this is a market that I think continues to see a lot of noisy behavior, and lackluster performance.
• The Bitcoin market needs cheap money to get moving and of course risk appetite.
• Risk appetite is a situation where we are waiting to see cheap money coming out of the Federal Reserve, and therefore it’s likely that we will be reading every statement and every little economic announcement as a potential mover for Bitcoin.

This is a bit ironic, because most true believers of Bitcoin believe that they are operating outside of the “traditional financial markets”, but the reality is that Bitcoin’s best friend is the Federal Reserve. When the Federal Reserve monetary policy was very loose, it was great for Bitcoin. However, as the Federal Reserve tightens monetary policy, institutional firms (gamblers) throw a lot of money into Bitcoin since it has a high amount of volatility. When money is cheap, they can get it for next to nothing and pay back those loans rather rapidly.

Market Expected to Rally

However, once there are costs to borrowing money and suddenly becomes a lot different, as the risks are multiplied. Therefore, Bitcoin has no real momentum to it, nor will it anytime soon, as the Federal Reserve must worry about the inflationary pressures in the United States and of course the economy slowing down in general. The Federal Reserve is trying to orchestrate a “soft landing”, something that is almost impossible and most great thinkers believe won’t happen. If the economy really gets racked, it’s almost impossible to imagine a situation where people were going to be throwing a lot of money into Bitcoin, which of course is unproven. Adoption still runs extraordinarily slow, and even though there are a lot of developers on the network, we’ve yet to see a moneymaking endeavor.

In this next cycle, Bitcoin needs to prove itself as a viable system, or we could see Bitcoin fall apart. The market will more likely than not rally as soon as the Federal Reserve starts to pivot, but we are light years away from seeing that happen. Ultimately, I think that if we break down below the $18,000 level, then we could go to the $15,000 level, followed by the $12,000 level while I would start to accumulate for the longer-term move.

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