Is Bitcoin Building Up Support Near $60,000?

Bitcoin Recently Fell Through A Key Support Level—What’s Next?

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Several technical analysts have commented on bitcoin’s recent price declines. Photo by: STRF/STAR … [+] MAX/IPx 2021 3/13/21 Bitcoin rises above $60K to a new record high.

STRF/STAR MAX/IPx

Bitcoin prices recently dropped below their 50-day moving average (MA) and have stayed below this key level for a matter of days, a development that has prompted coverage from multiple media outlets.

However, is the recent decline as bearish as some make it seem? Several analysts have weighed in on the cryptocurrency’s latest price movements, as well as their broader implications.

The world’s most prominent digital currency suffered some notable losses over the weekend, falling from more than $62,000 to almost $52,o00, CoinDesk data shows.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

After bitcoin experienced this pullback, the digital asset was trading below its 50-day simple moving average (SMA), a development reported on by CoinDesk reporter Omkar Godbole, as well as other journalists.

Godbole emphasized that the digital currency could be headed for further losses if it remains below the 50-day SMA.

While bitcoin’s latest drop may be cause for concern, it doesn’t capture the full picture, noted William Noble, the chief technical analyst for research platform Token Metrics.

“BTC is below its 50-day moving average because of massive selling in BTC as a result of margin calls,” he stated.

“When leveraged players are forced to sell, that tends to put technical indicators in the back seat temporarily.”

“Once the hangover from the leveraged selling wears off, we expect BTC to recover back above the 50-dma and pull in buyers of all types,” said Noble.

Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain, also weighed in.

“Bitcoin trending under the 50-day moving average is cause for concern since it has not traded beneath it since October 2020, but more context is needed,” he stated.

“On the daily chart we can see that Bitcoin has been trading beneath the 50-day moving average for nearly four days straight,” said Mancini.

“We can see that each daily candle has a long wick extending down, which is generally seen as a bullish sign, especially on the daily chart. We are also at the lowest RSI level (41) since September 2020, and the Stoch RSI has fully reset.”

“Combining all of these indicators on the daily chart, things look more bullish than they do bearish, especially if hash power continues to rise,” he concluded.

Mancini commented on the potential downside, stating that:

“If Bitcoin does not break upwards within the next few days we are likely headed down to the 100-day moving average, which will be below $50,000.”

Jason Lau, COO of cryptocurrency exchange OKCoin, provided a similar assessment.

“In the past six months, the 50-day MA has been fairly reliable as an area of support. Recently, we saw BTC fail to sustain a breakout upwards, and then subsequently falling through the 50-day MA – a bearish set up.”

“However, over the past four days, markets seem to be consolidating around this price level,” he noted.

“If there is a large further move down, I am looking at the 100-day MA (~$50k) as the next potential area of support,” said Lau.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.

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