Crypto Analysts Focus on Bitcoin (BTC) 50-Day Moving Average After 11% Price Drop

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Bitcoin (BTC) has come under pressure recently due to weakness in tech stocks and a rise in bond yields. The pullback has caused some analysts to zero in on a key bitcoin price average for clues about the next possible move in the cryptocurrency.

The leading cryptocurrency by market value was trading at $27,400 at press time, down 11% from a 10-month high of $31,000 reached on April 14, according to data from CoinDesk. The decline drew attention to bitcoin’s 50-day simple moving average (SMA), currently at $27,244.

According to Alex Kuptsikevich, Senior Market Analyst at FxPro, a potential violation of the 50-day SMA support would challenge the bullish sentiment of the market.

“The market has erased its previous growth momentum and is now testing the strength of the medium-term uptrend in the form of the 50-day moving average,” Kuptsikevich said in an email. “A break below this figure would challenge the strength of the bull market, while a consolidation below $26,600 could be the prologue to a deeper decline.”

The 50-day SMA is one of the most followed technical lines in traditional markets and cryptocurrencies. Crypto analysts have previously been tracking crossovers above/below the key average to confirm bullish and bearish trend changes.

The sellers got tired of penetrating the 50-day SMA on Monday but failed. Should the breakdown occur, focus would shift to the next support at $25,200, the level that capped the upside between August 2022 and February 2023, as seen in the weekly chart above.

According to Katie Stockton, Founder and Managing Partner of Fairlead Strategies, SMA support may be fleeting and could soon pave the way for a deeper decline.

“Bitcoin is testing the 50-day SMA, a minor level where near-term oversold conditions should generate a brief pause before bitcoin rallies back towards key support (~$25,200),” Stockton said in a note to the media. customers on Monday evening.

Oversold conditions illustrate a noticeable and consistent downward movement in price over a specified period of time without much pullback. Technical analysts use indicators such as the relative strength index and the stochastic to assess overbought/oversold conditions on different time charts (daily, weekly, hourly).

That said, if the SMA continues to hold firm, a new higher leg consistent with the broader bullish outlook will likely resume.

“The recent escape [March move above $25,200] and a positive weekly MACD support a medium-term bullish bias, with the next major resistance near $35,900,” Stockton noted.

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