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Bitcoin (BTC) Price Drops Below 200-Day Average; Focus on Bull Market Trendline
Bitcoin (BTC) The decline accelerated as the largest cryptocurrency fell for the third straight day, falling below the 200-day simple moving average (SMA), a good indicator of long-term price trends in both traditional and cryptocurrency markets.
According to data from charting platform TradingView, the cryptocurrency fell below the mid-$58,492 level during European trading hours on Thursday, falling below $57,300, a price last seen on May 2.
Markets that consistently trade below the 200-day average are considered to be in a downtrend, while those that trade above the average are considered to be bullish. BTC rose above the 200-day SMA in October, when it averaged $28,000. The breakout, fueled by expectations for a U.S. spot bitcoin ETF, paved the way for a rally to record highs above $70,000 by March.
One factor in bitcoin’s price movements is the U.S. interest rate. As rates fall, the appeal of riskier investments like cryptocurrencies increases. Federal Reserve meeting minutes released Wednesday showed that policymakers led by Chairman Jerome Powell are reluctant to cut rates until more data emerges that gives them greater confidence that inflation is sustainably moving toward their 2% target. That could happen as soon as tomorrow, when the Labor Department releases its June nonfarm payrolls data.
“We believe Jerome Powell’s hawkish comments and ongoing selling pressure will likely push BTC to 52,000,” Valentin Fournier, a digital asset analyst at consultancy brn, said in an email. “However, we recommend viewing this as a buying opportunity, as improving crypto regulations and cooling US inflation have not been fully priced in and will likely bring strong momentum once investors shift focus to a longer-term view.”
The sell-off could end if payrolls data shows a weakening labor market in June. The figure is expected to show payrolls rising by 195,000, a notable slowdown from the previous month’s 272,000, according to FXStreet. The unemployment rate is expected to have held steady at 4.0%, while average hourly earnings are forecast to have slowed to 3.9% from 4.1% year over year.
The bull market progression can be identified by a rising trend line connecting the October and January lows. BTC’s latest break below the 200-day line has put the focus on the bull market trend line support at $57,590.
A close (midnight UTC) below this level could lead to further selling and a downside price move, as traders often use trend line analysis as indicators to make trading decisions.
Fournier isn’t alone in seeing further declines. According to Alex Kuptsikevich, senior market analyst at FxPro, prices could fall to $51,500 in the near term.
“From the current position, a 12% decline to $51,500 (February consolidation area) is more likely than a 12% increase to $65,800 (50-day moving average),” Kuptsikevich said in an email.
UPDATE (July 4, 9:45 UTC): Adds interest rate, employment report starting in fourth paragraph, analyst quote in fourth, possible decline in last two paragraphs.