Bitcoin (BTC) faces a sink-or-swim resistance test to confirm its “macro breakout,” says a new analysis.
so Tweet On Feb. 2, on-chain monitoring resource Material Indicators flagged a critical level for BTC/USD to switch to support after breaking above $24,000.
Bitcoin price gears up for trendline showdown
In a final boon to Bitcoin bulls, the US Federal Reserve announced on Feb. 1 what risk-on traders wanted to hear.
Chairman Jerome Powell’s use of the term ‘disinflation’ quickly raised hopes for an early end to rate hikes and a return to looser financial conditions.
The mood is evident across cryptocurrencies, with BTC’s price action reversing its initial decline and hitting a six-month high of $24,250 on Bitstamp.
A subsequent correction saw the largest cryptocurrency drop about $500, but the mood has been booming since then.
However, for the good times to continue, Material Indicators believes BTC/USD will need to tackle two trendlines that have been forming resistance for much of 2022.
These are the 50-week and 200-week moving averages (WMAs), and the bulls have so far failed to retest them, let alone reverse toward support.
The 50WMA and 200WMA are currently at $25,345 and $24,837 respectively, confirmed by Cointelegraph Markets Pro and TradingView data.
“[BTC] We should test the major moving averages to confirm macro breakouts or fakeouts,” said one of the comments.
The attached chart shows the state of Binance’s order book at the time, allowing the resistance to shift higher and spot prices to rise. was already expanded before the .
Subsequently, Material Indicators described the subsequent rise in BTC price as a “herd of bulls going through the gate” in the absence of resistive pressure.
“It is undecided whether it will lead to slaughterhouses or auction houses at 50WMA and 200WMA,” he added.
“Toppy Sign” and “Wild Card”
Currently, BTC/USD stands out from the rest in its history as it has spent the longest period of time below the 200WMA, a key aspect of the 2022 bear market.
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Additionally, the two WMAs in focus form what is known as a “dead cross” where the descending 50WMA crosses below the 200WMA.
If this unfolds, analysts fear there could be new downsides, as has previously been the case for events on lower timeframes.
“Risk assets are definitely correlated, but BTC outperformed TradFi with a 40% gain in January,” said Keith Alan, co-founder of Material Indicators. commented Before the Federal Reserve.
“Now SPX has a triple top monthly and BTC heading towards death cross weekly. These are the best signs, but the Fed, FANG and the labor market are dealing wild cards.”
The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views or opinions of Cointelegraph.