Given the prolonged indecision since mid-February, Bitcoin has been a tough market to trade.
However, BTC has some excellent high time frame levels, and recent price action suggests a significant move is imminent.
The question is, which way will it break?
There are valid arguments for both bulls and bears, considering how much excess liquidity has developed beyond the current range.
But an answer to Bitcoin’s future direction hinges on the S&P 500.
That’s no surprise since the crypto market loves to follow equities.
However, where the S&P 500 is trading this week makes the relationship even more meaningful.
As mentioned on Twitter earlier on Thursday, the S&P 500 (SPX500) tested its all-time high trend line at 3,930.
That’s a must-hold area for bulls. Any daily close below that region would likely have significant implications for risk assets, not just equities.
We saw a decent bounce on Thursday from trend line support, but the question is, will bulls follow through on Friday?
If yes, we will probably see Bitcoin rally into the weekend.
But if Friday’s session falls flat and wipes out Thursday’s gain, that weakness will likely spill into the crypto market.
Furthermore, the 4,020 level is the one bulls must reclaim on a daily closing basis.
Do that, and it opens up 4,085, which would also push BTC higher.
As for Bitcoin itself, it needs to hold above the month open at $23,130 and the January trend line at $23,200 to remain constructive.
Bitcoin bulls must also secure a daily close above the weekly open at $23,550 and the key $23,800 horizontal level.
Do that, and I think we see BTC rally toward the $25,200 equal highs and potentially $26,000.
There’s approximately $130 billion in short liquidations between $25,400 and $26,000. So any confirmed bullish breakout will probably target that region.
Alternatively, there’s $150 billion in long liquidations between $20,800 and $21,000. So that’s the target on a confirmed break below $23,130.
