Markets
Bitcoin (BTC) Price Falls Below 200-Day Average; Bullish Market Trend Takes Center Stage
Bitcoin (BTC) The decline accelerated as the largest cryptocurrency fell for a third consecutive day, breaking below the 200-day simple moving average (SMA), a good indicator of long-term price trends in traditional and crypto markets.
The cryptocurrency fell below the average level of $58,492 during European hours 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 moving average are considered to be in a downtrend, while those that trade above the average are considered bullish. BTC broke above the 200-day moving average in October, when the average value was $28,000. This 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 influencing bitcoin’s price movements is U.S. interest rates. When rates fall, the appeal of riskier investments like cryptocurrencies increases. The Federal Reserve’s meeting minutes released Wednesday showed that policymakers led by Chairman Jerome Powell are unwilling to cut rates until there is more data 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 June nonfarm payrolls figures.
“We believe Jerome Powell’s aggressive comments and continued selling pressure are likely to push BTC down to 52,000,” Valentin Fournier, digital asset analyst at consultancy brn, said in an email. “However, we recommend viewing this as a buying opportunity as improved regulation around cryptocurrencies and slowing inflation in the U.S. have not been fully priced in and are likely to provide strong momentum once investors focus on a longer-term view.”
The sell-off could run out of steam if payroll data shows the labor market weakened in June. According to FXStreet, the figures are expected to show that payrolls rose by 195,000, a notable slowdown from 272,000 the previous month. The unemployment rate is expected to hold steady at 4.0%, while average hourly earnings are expected to slow to 3.9% from 4.1% year-over-year.
The bull market’s progress can be identified by an ascending trendline connecting the October and January lows. BTC’s latest break below the 200-day line has highlighted the bull market trendline support at $57,590.
A close (midnight UTC) below this level could lead to further selling and downward price momentum, as traders often use trendline breaks as indicators to make trading decisions.
Fournier isn’t the only one who sees 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% decline to $51,500 (February consolidation zone) is more likely than the same amount of growth to $65,800 (50-day MA),” Kuptsikevich said in an email.
UPDATE (July 4, 9:45 UTC): Add interest rate, jobs report from fourth paragraph, analyst quote in fourth, possible cut in last two paragraphs.