Bitcoin (BTC) has been trending down for the third consecutive day and has fallen below the 200-day simple moving average (SMA). The SMA is an important indicator in technical analysis and shows long-term price trends in traditional markets and digital currencies.
According to data from TradingView, Bitcoin broke through its key support level of $58,492 set by the 200-day simple moving average in European trading on Thursday, hitting its lowest level since then with an entry at $57,300 on May 13.
Markets trading below the 200-day SMA are generally considered to be a bearish trend, while markets above it indicate a bullish trend. Bitcoin managed to break the 200-day mark in October 1402, when the average was around $28,000, thanks to optimism about the launch of a Bitcoin-based exchange-traded fund (ETF) in the United States. This jump led to a bullish trend that reached over $70,000 in April.
One of the factors influencing Bitcoin price fluctuations is the US interest rate. Lower interest rates increase the appeal of riskier investments, such as digital currencies. But the minutes of Wednesday's Federal Reserve meeting showed that officials, led by Federal Reserve Chairman Jerome Powell, were unwilling to cut interest rates until additional economic data suggested that inflation was heading towards its 2% target. The data should be available when the US Department of Labor releases last month's nonfarm payrolls report on Friday.
Valentin Fournier, a digital asset analyst at consultancy brn, predicts that Jerome Powell’s cautious comments on interest rate cuts and continued selling pressure could push Bitcoin to lows of $52,000. However, he recommends viewing this as a buying opportunity, as better regulation of digital currencies and lower inflation in the U.S. will likely lead to a significant increase in interest rates as investors focus on a longer-term outlook. sera
If last month’s payroll data points to a weaker labor market, the current selling trend could come to a halt. According to FXStreet, the number of jobs created in June is expected to decline to 195,000 month-on-month (from 272,000 in May). The unemployment rate is expected to remain at 4%, and average hourly earnings will slow to 3.9%, compared to 4.1% growth last year.
The rising trendline connecting the October and January price lows was one of the key indicators to measure the strength of the bull market. Bitcoin’s recent decline below the 200-day simple moving average has drawn attention to the bull market’s support trendline at $57,590. A close below this level (12:00 p.m. ET) could trigger further selling and bearish price action, as trendline breakouts are often used as trading signals by professional traders.
Fournier is not alone in expecting further price declines. Alex Kopetcikovich, senior market analyst at FxPro, believes that prices could see less volatility in the short term. Kopetsikovich believes that prices could see less volatility in the short term. Kopetcevich says:
Given the current situation, a 12% decline to $51.5k (February price stabilization range) is more likely than a similar rise to $65.8k (50-day moving average).
The market is closely monitoring upcoming developments, including economic data releases and regulatory changes that could impact Bitcoin’s performance.
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