Bitcoin Breaks Key Technical Levels As It Heads Lower

Bitcoin Breaks Key Technical Levels As It Heads Lower
Andrew Rummer

almost 3 years ago1 min

For the first time since bitcoin’s six-month rally from $10,000 to almost $65,000, the OG cryptocurrency has this week broken below its 50-day moving average, a key technical level that gave support to previous pullbacks. 

A moving average is – just as its name suggests – simply an average of prices over a preceding period of time. Investors who put store in technical analysis see a drop below key levels like the 50- or 200-day moving averages as a bad sign. 

After tumbling 25% from last week’s all-time high, bitcoin has as of 6am New York time broken both its 50- and 100-day moving averages (shown in pink and green, respectively, on the chart above) for the first time since this rally began in October. The price would have to slide another 29% before hitting the current 200-day moving average. 

The lower panel in the chart shows how bitcoin’s Relative Strength Index – a classic indicator of the momentum behind recent price movements – has dropped below 30 for the first time since the March 2020 sell-off. 

Interestingly, bitcoin has been hit harder than other cryptocurrencies since April 14th, the day that Coinbase – the largest US crypto exchange – listed on the stock market. Relative to the Bloomberg Galaxy Crypto Index of the largest tokens, bitcoin’s price has slipped near to the lowest level since July 2019.

Bitcoin price divided by the Bloomberg Galaxy Crypto Index
Bitcoin price divided by the Bloomberg Galaxy Crypto Index
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