Bitcoin (BTC) faces a sink-or-swim stress test to confirm its “macro breakout,” says a new analysis.
in a cheep On Feb. 2, on-chain monitoring resource Materials Indicators marked key levels to switch to support after BTC/USD soared above $24,000.
Bitcoin Price Prepares for Trend Line Showdown
In what was ultimately a boon for Bitcoin bulls, the United States Federal Reserve delivered what risk traders wanted to hear on February 1.
With Chairman Jerome Powell using the word “disinflation”, hopes immediately began to bet that rate hikes would end sooner and monetary conditions would ease back into place.
The mood was palpable across all cryptocurrencies, with BTC price action reversing an initial decline to see fresh six-month highs of $24,250 on Bitstamp.
While a subsequent correction brought the largest cryptocurrency down to around $500, the mood has remained upbeat ever since.
However, for the good times to continue, Material Indicators believes that BTC/USD must now address two trend lines, which have formed resistance for much of 2022.
These are the 50 and 200 week moving averages (WMAs), and thus far, the bulls have not even been able to retest them, let alone trade them for support.
The 50WMA and 200WMA are currently sitting at $25,345 and $24,837, respectively, data from Cointelegraph Markets Pro and TradingView confirm.
“You should test the key moving averages to confirm macro breakout or fakeout,” part of the comment read.
An accompanying chart showed the state of the Binance order book at the time, with resistance rising to allow the spot price to rise with it. As Cointelegraph reported, this is a phenomenon that had already been playing out before the Fed event.
Continuing, Material Indicators described the subsequent BTC price surge as a “Bull Herd Stampede through the gate” in the absence of resistance pressure.
“Whether you drive to the slaughterhouse or the TBD auction house in 50WMA and 200WMA,” he added.
“toppy signs” and “wildcards”
Currently, BTC/USD has spent longer than ever below 200WMA, a key aspect of its 2022 bear market that set it apart from others in its history.
Related: Best January since 2013? 5 things to know about Bitcoin this week
Additionally, the two WMAs in focus are in the process of forming what is known as a “death cross”, where the falling 50WMA crosses below the 200WMA.
If this plays out, analysts fear it could lead to further downside, as has previously happened with events on shorter time frames,
“Risk assets have certainly correlated, but BTC outperformed TradFi in January with a 40% rally,” said Keith Alan, co-founder of Material Indicators. commented Before the Fed.
“Now, SPX is at a triple top on the Monthly and BTC is heading for a Death Cross on the Weekly. These are good signs, but the FED, FANG and the job market are all handing out wild cards.”
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