Key Points
- Bitcoin (BTC) has dropped below the 200-day Simple Moving Average (SMA), trading at $57,534.24.
- The 200-day SMA is a significant indicator of long-term price trends in cryptocurrency and traditional markets.
Bitcoin’s (BTC) price has experienced a significant fluctuation over the past 24 hours, leading to speculation among investors. The leading cryptocurrency is currently valued at $57,534.24, marking a 4.3% decrease in the last 24 hours. This is the third day of consecutive price drops for the digital currency, which has now fallen below the 200-day Simple Moving Average (SMA).
Understanding the Downward Trend
The 200-day SMA is a reliable indicator of long-term price trends in both traditional and crypto markets. During Thursday’s European hours, Bitcoin fell below the average of $58,492 to less than $57,300. This price point was last observed on May 2, according to TradingView data. Typically, when the market consistently trades below the 200-day SMA, it is considered to be in a downward trend.
Conversely, those trading above the average are seen as moving in a bullish direction. An example of this was in October when Bitcoin’s average price was roughly $28,000. The anticipation of the spot Bitcoin ETF, which was introduced in January, and the October breakout pushed Bitcoin’s price to an all-time high of over $73,000.
Factors Influencing Bitcoin’s Price
The US interest rate, determined by the Federal Reserve, plays a crucial role in Bitcoin’s price. A drop in interest rates leads to an increased interest in riskier investment alternatives, such as digital assets. In the most recent Federal Reserve meeting, policymakers led by Chairman Jerome Powell decided not to pursue any rate cut for the time being.
At least not until more data is available to provide them with greater confidence that inflation is sustainably moving towards their 2% target. The Labor Department’s non-farm payrolls figure for June is set to be released on Friday. This could be the data that policymakers need to make another decision on interest rate cuts.
According to an email from Valentin Fournier, a digital assets analyst at advisory firm brn, Bitcoin could potentially drop as low as $52,000. This sentiment could be driven by hawkish comments from Jerome Powell and ongoing selling pressure. Fournier suggests viewing this as a buying opportunity, as improving regulations around cryptocurrencies and cooling inflation in the US have not been fully priced in and are likely to bring strong momentum once investors shift focus to a longer-term vision.
Meanwhile, weakened payroll data for the Labour Market could lead to a decrease in selloff. The expectation is that payrolls will increase by 195,000, which would be a significant slowdown from the 272,000 recorded in the previous month.
Despite these potential prospects, Bitcoin advocates like Robert Kiyosaki, Michael Saylor, founder of MicroStrategy, and El Salvador still believe that investing in Bitcoin is the best hedge an investor can have.
