Bitcoin Bulls Need To Recover
Bitcoin (BTC) is facing a sink-or-swim resistance test to confirm its “macro breakout,” according to a new analysis.
In a Tweeter On February 2, on-chain monitoring resource Material Indicators signaled key levels to swing towards support after BTC/USD broke above $24,000.
Bitcoin Price Prepares for Trendline Showdown
In what ultimately proved to be a boon for Bitcoin bulls, the United States Federal Reserve delivered what venture traders wanted to hear on February 1.
With Chairman Jerome Powell using the word “disinflation,” hopefuls immediately began to bet on rate hikes ending earlier and easier monetary conditions returning to their places.
The mood was palpable across the crypto, with BTC price action reversing an initial decline to see fresh six-month highs of $24,250 on Bitstamp.
While a subsequent correction took the biggest cryptocurrency down around $500, the mood has remained buoyant ever since.
However, for the good times to continue, Material Indicators believes that BTC/USD now needs to tackle two trendlines, which have formed resistance for much of 2022.
These are the 50-week and 200-week moving averages (WMAs), with the bulls having failed to retest them so far, let alone turn them around for support.
The 50WMA and 200WMA currently stand at $25,345 and $24,837, respectively, confirms data from Cointelegraph Markets Pro and TradingView.
“[BTC] must test key moving averages to confirm macro breakout or counterfeit,” reads part of the commentary.
An attached chart showed the state of Binance’s order book at the time, with resistance rising to allow the spot price to rise with it. As Cointelegraph reported, this phenomenon had already happened before the Fed event.
Continuing, Material Indicators described the subsequent rise in BTC prices as a “herd of bulls rushing through the door” in the absence of resistance pressure.
“Whether that leads to the slaughterhouse or the auction house to be determined at 50WMA and 200WMA,” he added.
“Toppy signs” and “jokers”
Currently, BTC/USD has spent longer than ever below the 200 WMA mark, a key aspect of its 2022 bear market that set it apart from others in its history.
Related: Best January Since 2013? 5 things to know about Bitcoin this week
Additionally, the two WMAs in question form what is known as a “death cross,” where the falling 50WMA crosses below the 200WMA.
If that were to happen, analysts fear it could bring further downside, as it did before with events on shorter timeframes,
“There is no doubt that risk assets have been correlated, but BTC outperformed TradFi in January with a 40% rally,” Material Indicators co-founder Keith Alan, commented before the Fed.
“Now SPX has a triple top on the monthly and BTC is heading for a death cross on the weekly. These are disappointing signs, but the FED, FANG and the labor market have wild cards.
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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