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Bitcoin has been trading below its 200-week moving average since June.
Ozan Kose/AFP via Getty Images
Bitcoin
and other cryptocurrencies were lower on Wednesday as the biggest digital asset struggled above a key level, with crypto traders facing a tough choice whether prices are now at attractive levels or just poised to fall even further.
The price of Bitcoin fell 1% in the last 24 hours to $20,200, holding above the recent low of $19,550, which was the lowest level since mid-July.
“Bitcoin is holding firm and the price of Bitcoin is still hovering near $20,000, showing that bulls are trying their best to hold the price level,” Naeem Aslam, an analyst at brokerage AvaTrade, wrote in a note.
The largest crypto is trading at the lower end of the $20,000 to $25,000 range where it has stagnated since mid-June, when a dramatic selloff knocked Bitcoin down from $30,000. That’s still less than half of the November 2021 record of nearly $69,000.
“Weakness in the near term continues to haunt many Bitcoin fundamentals, with prices teetering,” analysts at crypto market intelligence group Glassnode wrote in a note.
It underscores the difficult choice that crypto traders now face. Bitcoin continues to trade below its 200-week moving average, which is a high technical level it has only fallen below on a handful of occasions, including bear markets in 2015, 2018/2019, and at the peak of the Covid-19-fueled sell-off in March 2020 .
“Buying below this well-known technical indicator has historically been a profitable strategy,” Bendik Norheim Schei, head of research at crypto firm Arcane, wrote in a note. Schei highlighted how Bitcoin has never traded this low for so long — almost two months. “We haven’t seen this before … undoubtedly a bearish technical signal.”
In previous years, Bitcoin and its peers have behaved like uncorrelated assets, with cryptos largely divorced from the whipsaws of the stock market. But that has largely changed since an influx of institutional money and a boom in professional traders in the wake of the last Bitcoin bull run, which began in late 2020.
Now, cryptos tend to trade in tandem with other risk-sensitive assets, such as stocks, often following fluctuations in
S&P 500
or
Nasdaq Composite
indexes. That can make it less reliable to rely on long-term rules of thumb, such as buying below the 200-week moving average.
Shares took a third day of losses on Tuesday. The latest leg of the downward slide can be blamed on Federal Reserve Chairman Jerome Powell, who indicated in a speech that the central bank would not stop raising interest rates – which usually depress stock prices – until smoldering inflation was under control. Bitcoin fell from $22,000 at the end of last week as it was blown up in the stock market.
“With the stock market clearly leading Bitcoin and other cryptocurrencies this year, it is dangerous to only consider technical levels when evaluating the Bitcoin price,” Schei said. The analyst is looking at the next major support levels on a weekly scale of $16,000, or even down between $11,000 and $12,000.
“However, on the bright side, Bitcoin is still trading above the 2017 peak, and it looks like the 2017 peak is now serving as a solid support level,” Schei said.
Beyond Bitcoin,
Ether
-the second-largest crypto-was down 1% to below $1,600. Altcoins, or smaller tokens, were more mixed in
Cardano
less than 1% higher and
Solana
2% lower. Memecoins were weaker, med
Dogecoin
and
Shiba Inu
down 2% to 3%.
Write to Jack Denton at [email protected]
