Bitcoin May Drop Further Below 50-Day Average: Analysts

Bitcoin May Drop Further Below 50-Day Average: Analysts

The Blockchain Industry: Analyzing the Recent Bitcoin Price Movement

Bitcoin (BTC), the leading cryptocurrency by market value, recently experienced a significant drop below a multiweek trading range. This drop has caught the attention of technical analysts, who are closely monitoring the situation and assessing the potential impact on the market. In this article, we will delve into the current state of the blockchain industry, provide a comprehensive analysis of the Bitcoin price movement, and explore the implications for investors and traders.

The three-week long-range play between $29,500 and $32,000 has been broken, confirming a breakdown in Bitcoin’s price. A key support level has been identified at the widely tracked 50-day simple moving average (SMA), currently located at $29,140. According to Katie Stockton, founder and managing partner of Fairlead Strategies, the outlook for Bitcoin could worsen if this support level fails to hold.

Stockton notes that “two consecutive daily closes below the 50-day MA (~$29.0K) would increase downside risk back to long-term support near $25.2K.” This suggests that Bitcoin may experience deeper losses if buyers are unable to defend the key support level. It is important to note that unlike stock markets, cryptocurrencies trade 24/7, without a daily close price. However, chart analysts consider the last traded price at 23:59 UTC as the daily close to determine the reliability of technical breakouts or breakdowns.

Analyzing the weekly chart indicators further supports the possibility of a move below the 50-day average. Stockton highlights an overbought downturn in the weekly stochastics, indicating a potential breakdown in Bitcoin’s price. The stochastic indicator is a widely used tool for assessing overbought and oversold conditions. In this case, the indicator has turned down from an overbought reading, signaling a precurser to price pullbacks. Additionally, the weekly Moving Average Convergence Divergence (MACD) is showing signs of a possible bearish shift in sentiment, further confirming the potential for a setback in Bitcoin’s price.

Alex Kuptsikevich, senior market analyst at FxPro, suggests that while the market seems to have found temporary equilibrium, there are still risks of deeper drawdowns. The decisions and comments of three major central banks – the Federal Reserve, the European Central Bank, and the Bank of Japan – are expected to play a crucial role in determining the market’s direction in the coming weeks.

Kuptsikevich warns that if bearish pressure intensifies and Bitcoin falls below the 50-day SMA, the next significant support level to watch is $27,000. This level represents the lower boundary of the rising channel from the November lows and aligns with the 200-week moving average.

In conclusion, the recent drop in Bitcoin’s price below a significant trading range has raised concerns among technical analysts. The support level at the 50-day SMA will be crucial in determining the future direction of Bitcoin’s price movement. The weekly chart indicators suggest a potential breakdown, with both the stochastic indicator and the MACD histogram pointing towards a bearish shift in sentiment. Furthermore, the upcoming decisions and comments from major central banks will play a crucial role in shaping the market’s trajectory in the coming weeks. As investors and traders navigate these uncertain times, it is important to closely monitor key support and resistance levels to make informed decisions.

*Note: This article has been edited by Sheldon Reback.

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