Bitcoin
Bitcoin (BTC) Price Drops Below 200-Day Average; Bull Market Trendline in Focus
Bitcoins (BTC) The decline gained momentum as the largest cryptocurrency fell for the third consecutive day, falling below the 200-day simple moving average (SMA), a good indicator of long-term price trends in both traditional and cryptocurrency markets.
The cryptocurrency fell below the mid-$58,492 level during European trading on Thursday to below $57,300, a price last seen on May 2, according to data from charting platform TradingView.
Markets that consistently trade below the 200-day average are considered to be in a bearish trend, while those that trade above the average are considered bullish. BTC surged above the 200-day SMA in October, when the average value was $28,000. The breakout — fueled by expectations of a spot bitcoin ETF in the US — paved the way for a rally to record highs above $70,000 in March.
One factor in bitcoin’s price action is U.S. interest rates. As rates fall, the allure of riskier investments like cryptocurrencies increases. Federal Reserve meeting minutes released Wednesday showed that policymakers led by Chairman Jerome Powell are unwilling to cut rates until more data emerges to give them greater confidence that inflation is moving sustainably toward their 2% target. That could happen as early as tomorrow, when the Labor Department releases its nonfarm payrolls figures for June.
“We believe Jerome Powell’s hawkish comments and ongoing selling pressure will likely push BTC towards 52,000,” Valentin Fournier, digital asset analyst at consulting firm brn, said in an email. “However, we recommend viewing this as a buying opportunity as improving regulations around cryptocurrencies and falling inflation in the U.S. are yet to be fully priced in and will likely provide a strong boost once investors shift focus to a longer-term view.”
The selloff could lose steam if payroll data shows the labor market weakened in June. The number is forecast to show payrolls rose by 195,000, a notable slowdown from 272,000 the previous month, according to FXStreet. The unemployment rate is expected to have held steady at 4.0%, while average hourly earnings are expected to have slowed to 3.9% from 4.1% year over year.
The bull market progression can be identified by an ascending trendline connecting the October and January lows. BTC’s latest break below the 200-day line has put the focus on the bull market trendline support at $57,590.
A close (midnight UTC) below this level could lead to further selling and falling prices, as traders often use trendline breaks as indicators to make trading decisions.
Fournier is not alone in seeing further declines. According to Alex Kuptsikevich, senior market analyst at FxPro, prices could fall as low as $51,500 in the near term.
“From the current position, a 12% drop to $51.5K (February consolidation area) is more likely than the same growth to $65.8K (50-day moving average),” Kuptsikevich said in an email.
UPDATE (July 4, 9:45 UTC): Adds interest rate, jobs report starting in fourth paragraph, analyst quote in fourth, possible decline in last two paragraphs.