Crypto analysts focus on Bitcoin’s (BTC) 50-day moving average after 11% price pullback
Bitcoin (BTC) has come under pressure recently due to weakness in technology stocks and a rise in bond yields. The pullback has some analysts focusing on a key average of bitcoin’s price for signals about the next possible move in the cryptocurrency.
The leading cryptocurrency by market capitalization was trading at $27,400 at press time, down 11% from a 10-month high of $31,000 reached on April 14, CoinDesk data shows. The decline has brought 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 breach of the 50-day SMA support would challenge the bullish market sentiment.
“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 would question 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 tracked technical lines in traditional markets and cryptocurrencies. Crypto analysts have previously tracked crossovers above/below key moving averages to confirm bullish and bearish trend changes.
Sellers were tired of pushing through the 50-day SMA on Monday but failed. If the breakdown occurs, the focus will shift to the next support at $25,200 – the level that capped the upside between August 2022 and February 2023, as shown in the weekly chart above.
According to Katie Stockton, founder and managing partner of Fairlead Strategies, SMA support may be volatile and could soon pave the way for a deeper decline.
“Bitcoin is testing the 50-day SMA, a minor level where short-term oversold conditions should generate a brief pause before bitcoin resumes lower against key support (~$25,200),” Stockton said in a note to clients late Monday.
Oversold conditions illustrate a notable and consistent downward price movement over a specified period of time without much retracement. Technical analysts use indicators such as relative strength index and stochastic to measure overbought/oversold conditions across different time frame charts (daily, weekly, hourly).
That said, if the SMA continues to hold ground, another leg higher in line with the broader bullish outlook is likely to resume.
“The recent outbreak [March move above $25,200] and positive weekly MACD supports a bullish intermediate bias, with next major resistance near $35,900,” Stockton noted.
