Bitcoin’s price has been on a downward trend recently, falling below the 200-day SMA line for the first time since October. This is a significant indicator of long-term price trends in both traditional and crypto markets. The cryptocurrency dropped below the average’s $58,492 level during European hours on Thursday, reaching less than $57,300, a price last seen on May 2.
When markets consistently trade below the 200-day average, they are considered to be in a downtrend. On the other hand, when they trade above the average, it indicates a bullish trend. Bitcoin rose past the 200-day SMA in October, when the average value was $28,000. This breakout led to a rally to record highs above $70,000 by March, driven by expectations for a spot bitcoin ETF in the U.S.
One factor influencing bitcoin’s price movements is the U.S. interest rate. As rates decrease, the appeal of riskier investments like cryptocurrencies tends to increase. The minutes of the Federal Reserve meeting revealed that policymakers, led by Chairman Jerome Powell, are hesitant to cut rates until more data is available to give them confidence that inflation is moving sustainably toward their 2% target. This data may come as early as tomorrow when the Labor Department releases its non-farm payrolls figure for June.
Analysts like Valentin Fournier from advisory firm brn believe that hawkish comments from Jerome Powell and ongoing selling pressure could push BTC down to $52,000. However, Fournier sees this as a buying opportunity, as improved regulations around cryptocurrencies and cooling inflation in the U.S. have not been fully factored in yet. If investors shift their focus to a longer-term vision, strong momentum could follow.
The potential sell-off may lose steam if the payrolls data reveals a weakened labor market in June. Forecasts suggest an increase of 195,000 payrolls, a notable slowdown from the previous month. The jobless rate is expected to remain at 4.0%, while average hourly earnings are projected to slow to 3.9% year-on-year.
In terms of technical analysis, the bull market progression can be identified by a rising trendline connecting October and January lows. Bitcoin’s recent drop below the 200-day line has shifted the focus to the bull market trendline support at $57,590. A close below that level could lead to further selling and downward price momentum, as traders often use trendline breakdowns to make trading decisions.
Alex Kuptsikevich, a senior market analyst at FxPro, also anticipates further declines, suggesting that prices could slide to as low as $51,500 in the short term. He believes that a 12% drop to $51.5k is more likely than a similar amount of growth to $65.8k.
In conclusion, Bitcoin’s price movements are currently influenced by various factors, including the U.S. interest rate and upcoming jobs report data. Traders and analysts are closely monitoring these developments to make informed decisions about the cryptocurrency’s future price movements.