Bitcoin 200-EMA support under threat as BTC bulls fail to show up

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  • Bitcoin price is testing the 200-day EMA for a second time this week.
  • A breakout above $69,000 and holding there with stable price action can lead to a long.
  • A retest of $68,000 followed by a healthy rejection can lead to a short toward $60,800.

Bitcoin (BTC) price is lacking upward momentum as the bulls fail to show up. It comes amid elevated risk levels in the market, causing traders to look for safer entry points as analysts give divided opinions. 

Also Read: Markets may not see a new Bitcoin price ATH pre-halving unless $69K breaks

Bitcoin bulls fail to show up

Bitcoin price has slipped below the support offered by a critical support level, the 200-day Exponential Moving Average (EMA) at $65,574. However, the breakdown is not decisive as the pioneer cryptocurrency continues to hold above one of two trendlines that have been pivotal in BTC action for over six months.

Analysts are watching this level with concern that if it gives in, it could lead to more losses. This was seen during the second half of January, giving way to as much as 10% in downside momentum. The expectation is that if it holds, it could precipitate a rebound.

With inflows from BTC ETFs back above water, the assumption is that the downside potential seen in the Bitcoin price is attributed to smart money looking to catch retail off guard. Other theories suggest that the dump in the BTC market comes as cat-themed tokens are peaking.

Meanwhile, Federal Reserve chair Jerome Powell has urged markets not to expect interest rate cuts until there is more confidence on inflation.

Powell also noted that reducing rates too soon could result in a reversal of the progress seen on inflation so far:

Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy. If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.

In the immediate aftermath, Bitcoin price surged by 1% on concerns about inflation and, therefore, currency devaluation.

 

Cryptocurrency metrics FAQs

The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.

Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.

Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.

Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.

Bitcoin price prediction as 200-EMA remains critical

Bitcoin price action continues to maintain higher lows, while the Relative Strength Index (RSI) is showing lower lows. This is a typical hidden divergence, which could see BTC price drop before its potential leg up.

The position of the RSI below 50 is concerning, accentuated by the dwindling volumes of the Awesome Oscillator (AO). If Bitcoin price downtrend continues, a decisive slip below the 200-EMA, confirmed by BTC price moving below the upper trendline, would encourage more sell orders.

The ensuing selling pressure could see Bitcoin price test the $60,800 support, below which $60,000 would be imminent.

BTC/USDT 1-day chart

On the other hand, if the 200-EMA holds, it could provide the jumping-off point for Bitcoin price, sending it above the $69,000 threshold. If BTC bulls are able to hold above this level, it could initiate a continuation of the uptrend for BTC to reclaim the $73,777 peak before setting a new all-time high. 




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