Bitcoin’s 50-Day Moving Average in Focus for Crypto Analysts After 11% Price Pullback

Bitcoin (BTC) has come under pressure of late amid weakness in technology stocks and an uptick in bond yields. The pullback has some analysts focusing on a key average of bitcoin’s price for cues about the next possible move in the cryptocurrency.

The leading cryptocurrency by market value traded at $27,400 at press time, down 11% from the ten-month high of $31,000 reached on April 14, CoinDesk veri show. The decline has brought attention to bitcoin’s 50-day simple moving average (SMA), currently at $27,244.

According to Alex Kuptsikevich, senior market analyst at FxPro, a potential violation of the 50-day SMA support would challenge the bullish market sentiment.

“The market has erased its previous growth momentum and is now testing the strength of the medium-term uptrend in the form of the 50-day moving average,” Kuptsikevich said in an email. “A break below this would call into question the bull market’s strength, while a consolidation below $26,600 could be the prologue to a more profound decline.”

The 50-day SMA is one of the most widely-tracked technical lines in traditional markets and cryptocurrencies. Crypto analysts have previously tracked crossovers above/below the key average to confirm bullish and bearish trend changes.

Charts show a potential break below the 50-day SMA would expose former resistance-turned-support at $25,200. (CoinDesk/TradingView) (CoinDesk/TradingView)

Sellers tired to penetrate the 50-day SMA on Monday but failed. If the breakdown happens, the focus would shift to the next support at $25,200 – the level that capped the upside between August 2022 and February 2023, as seen in the weekly chart above.

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According to Katie Stockton, founder and managing partner at Fairlead Strategies, the SMA support may be fleeting and could soon pave the way to a deeper decline.

“Bitcoin is testing the 50-day SMA, a minor level where short-term oversold conditions should generate a brief pause before bitcoin resumes lower toward key support (~$25,200),” Stockton said in a note to clients late Monday.

Oversold conditions illustrate a notable and consistent downward move in price over a specified period of time without much pullback. Technical analysts use indicators like the relative strength index and stochastic to gauge overbought/oversold conditions over different time frame charts (daily, weekly, hourly).

That said, if the SMA continues to hold ground, a new leg higher consistent with the broader bullish outlook will likely resume.

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“The recent breakout [March move above $25,200] and positive weekly MACD support a bullish intermediate-term bias, with next major resistance near $35,900,” Stockton noted.

Edited by Parikshit Mishra.

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