Bitcoin Blasts Off, FOMO Drive Takes out 90k and Runs Towards 100

Bitcoin Talking Points:

• I talked about this in the immediate aftermath of the election but at the time it seemed like Bitcoin was the big winner with the election of Donald Trump and a week later, that looks to be even more the case.
• Bitcoin now has a FOMO (fear of missing out) vibe as the cryptocurrency was previously resisting at 90k, which was taken-out this morning and already prices have made a move towards 93,500.
• The big level ahead is the 100k spot that’s been talked about and projected even since the 2021 move.

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Going back just a week ago before election results started to come in, Bitcoin had held below the prior ATH at 73,609. That high was set in March and it held a second test in late-October as prices pulled back into the US Presidential Election. The pullback from the second test remained pretty orderly though, with support showing at a prior point of resistance of a bearish trendline taken from March and July highs.

That support test showed just a day ahead of the election and that came along with a shocking move in prediction markets that weekend that gave Kamala Harris a chance at winning the Presidency, which of course did not come to fruition. The move on election day last Tuesday was somewhat reserved but as results poured in that night, Bitcoin started to break out and set course for its first test above the 75k level.

As I said at the time, markets were showing high volatility with both USD strength and strength in US equities; but it was Bitcoin that seemed like the big winner as Trump had taken a friendly stance with the crypto community leading into the election. That first test of 75k slowed bulls for a few days as some profit taking took place, but that price was soon coming in as support and it was on Sunday when bulls pushed up to the next big figure at 80k and price has only continued to break out through early-trade this week.

Bitcoin Daily Chart

Bitcoin: The FOMO

I regularly talk about this on webinars but amazingly, many market participants seem to get most bullish at highs or tests of resistance and bearish on tests of support or near lows. This, of course, can be an open door to ‘selling bottoms and buying tops’ and this makes the prospect of breakout strategies as somewhat dangerous for many retail traders.

But markets are social manifestations of human behavior and given the unique aspect of cryptocurrency where it’s largely driven by social dynamics, there can be even more of a drive as breakouts press to fresh highs and that triggers a fear of missing out. This is like what showed during bullish runs in 2017, 2019 and more recently, in 2021.

Interestingly each of those came with a falling USD on the back of Fed policy, particularly the most recent scenario in 2021. But now the US Dollar is similarly showing strength, and this is what I spoke of in that video and article in the aftermath of last week’s election. At this point it appears that we’re still seeing pricing-in of expectations around a Trump administration and given how well he cozied up to the crypto community in the lead-up to the election, there seems to be an element of excitement that hasn’t’ been seen in the space in some time. This helps to explain the near 40% run from last week’s low and the whopping 58.8% run from last month’s swing-low.

The bigger question now is how to work with the move as strength has been so aggressively priced-in.

Bitcoin Four-Hour Price Chart

Bitcoin: Managing FOMO and Parsing Parabolas

While the move has been aggressively priced-in over the past week-and-change, there has been opportunity for pullbacks. There’s a dearth of historical price action at current levels, of course, but as I had looked at in yesterday’s webinar, there was already a show of higher-low support above the 85k level even as the 90k price wouldn’t yet give way.

There was even a build of a short-term ascending triangle formation, often tracked with the aim of bullish breakouts, which led into this morning’s move-higher.

I think the next resistance above current price is rather obvious with the 100k level and that seems like a price that could potentially pause the move for a bit, as it would be an attractive spot for longs to take profit, especially those that have added exposure since the election. For a 33% move in a little more than a week, there’s an opportunity to take some profit and exposure off the table and I think that big figure represents something of that nature.

But, there’s also no sign yet that the trend is over and much like we saw buyers pile in at higher-lows above the 85k level, a similar possibility exists with prior resistance at 90k.

For next resistance ahead of a 100k test, the 95k level seems a logical place to look for a pause in the move before the big level comes into play.

Bitcoin Two-Hour Chart

--- written by James Stanley, Senior Strategist