Bitcoin Dips Below 200-Day Moving Average; Market Trendline Comes into Play
BTC has once again tested the 200-day simple moving average (SMA) line, marking the first instance since October. This development has shifted the focus onto the trendline that represents the surge observed from October lows.
Bitcoin’s decline gained momentum on Thursday, causing prices to fall below the 200-day SMA, which is considered a reliable indicator for long-term trends in both traditional and cryptocurrency markets. During European trading hours, the digital currency dropped below the 200-day SMA at $58,492, with lows reaching below $57,300, a level that was last seen on May 2, as per data from TradingView.
It is commonly believed that markets trading consistently below the 200-day SMA are in a downtrend, whereas those trading above it are considered bullish. BTC surpassed the 200-day SMA in October, with the average value at $28,000, triggering a significant rally that propelled prices to record highs above $70,000 by March. During this bullish phase, a rising trendline linking the lows of October and January can be observed, indicative of the upward trend.
Now, with Bitcoin breaking below the 200-day line, attention has shifted to the support provided by the bull market trendline, which currently stands at $57,590. If BTC closes below this level by midnight UTC, it could potentially trigger further selling and generate downward price momentum. Traders often use trendline breakdowns as indicators to inform their trading decisions.