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Bitcoin Must Overcome The 200-Day SMA To Reverse Trend
The 200-day simple moving average (SMA) is widely regarded as a reliable long-term indicator for predicting an asset’s future price movements. Currently, Bitcoin’s 200-day SMA is showing signs of weakening bullish momentum, which is not a welcome sign for short-term traders.
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It is noteworthy that this is the first instance since October 2023 that the 200-day SMA is on the verge of entering bearish territory. Since late August, the daily price increases for BTC have not exceeded $50, a stark contrast to the consistent $200 daily price movements seen in the first half of 2024. As of now, the 200-day SMA is positioned at $63,840, which is approximately 13.96% higher than Bitcoin’s current price of $56,840.
Additionally, short-term moving average indicators like the 50-day SMA and the 100-day SMA have already peaked and are trending downward. A bearish crossover recently occurred when the 100-day SMA fell below the 200-day SMA. According to cryptocurrency analyst Ali Martinez, the Stochastic relative-strength index (RSI) has indicated a trend reversal from bullish to bearish on Bitcoin’s 2-month chart. Historically, such a move has often led to a significant correction of up to 75.50%.
Google Trends data further supports this bearish sentiment, showing that searches for the term “Bitcoin” are at their lowest since October 2023, a time when BTC was trading around $30,000.
Adding to the bearish outlook, former CEO of the BitMEX cryptocurrency exchange, Arthur Hayes, expressed on X that he is currently shorting Bitcoin and predicts the crypto-asset could plummet to below $50,000 over the weekend. In contrast, some market experts believe that Bitcoin will likely find a bottom at $55,000 before an anticipated influx of US liquidity triggers a resurgence in buying pressure.
Bitcoin’s Fundamentals Remain Intact
Despite the bearish short-term outlook from several crypto analysts, the long-term bullish case for Bitcoin remains robust. Crypto analyst Crypto Jelle suggests that Bitcoin’s lackluster price action during the summer might conclude by early October, potentially paving the way for another upward rally.
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Institutional interest in Bitcoin continues to grow, with Swiss banking giant ZKB recently introducing Bitcoin (BTC) and Ethereum (ETH) trading and custody services for its customers. At the time of writing, Bitcoin is trading at $56,018.
Bitcoin price action on the daily chart | Source: BTCUSD on TradingView.com
Featured Image from Unsplash.com, Chart from TradingView.com
