Bitcoin (Bitcoin) is facing a sink-or-swim resistance test to confirm its “macro breakout,” a new analysis says.
so Tweet On Feb. 2, on-chain monitoring resource Material Indicators flagged a critical level for BTC/USD to switch to support after breaking above $24,000.
Bitcoin price gears up for trendline showdown
What ended up being a boon to Bitcoin bulls is what the US Federal Reserve has to offer risk-on traders. i wanted to ask February 1.
Chairman Jerome Powell’s use of the term ‘disinflation’ quickly raised hopes for an early end to rate hikes and a return to looser financial conditions.
The mood is evident across cryptocurrencies, with BTC’s price action reversing its initial decline and hitting a six-month high of $24,250 on Bitstamp.
A subsequent correction saw the largest cryptocurrency drop about $500, but the mood has been booming since then.
However, for the good times to continue, Material Indicators believes BTC/USD will need to tackle two trendlines that have been forming resistance for much of 2022.
These are the 50-week and 200-week moving averages (WMAs), and the bulls have so far failed to retest, let alone flip to support.
The 50WMA and 200WMA are currently priced at $25,345 and $24,837 respectively. Cointelegraph Market Pro When TradingView confirm.
“[BTC] We should test the major moving averages to confirm macro breakouts or fakeouts,” said one of the comments.
The attached chart shows the state of Binance’s order book at the time, where the resistance shifted higher allowing the spot price to move higher. As reported by Cointelegraph, this phenomenon already playing before the Federal Reserve event.
Subsequently, Material Indicators described the subsequent rise in BTC price as a “herd of bulls going through the gate” in the absence of resistive pressure.
“It is undecided whether it will lead to slaughterhouses or auction houses at 50WMA and 200WMA,” he added.
“Toppy Sign” and “Wild Card”
Currently, BTC/USD stands out from the rest in its history as it has spent the longest period of time below the 200WMA, a key aspect of the 2022 bear market.
Related: Best January since 2013?5 things to know about Bitcoin this week
Additionally, the two WMAs in focus form what is known as a “dead cross” where the descending 50WMA crosses below the 200WMA.
If this unfolds, analysts fear there could be new downsides, as has previously been the case for events on lower timeframes.
“Risk assets are definitely correlated, but BTC outperformed TradFi with a 40% gain in January,” said Keith Alan, co-founder of Material Indicators. commented Before the Federal Reserve.
“Now SPX has a triple top monthly and BTC heading towards death cross weekly. These are the best signs, but the Fed, FANG and the labor market are dealing wild cards.”
The views, thoughts and opinions expressed herein are those of the author only and do not necessarily reflect or represent the views or opinions of Cointelegraph.