Over the past 24 hours, Bitcoin (BTC), the largest cryptocurrency in the market by capitalization, has once again failed to consolidate above the $27,000 level. This key resistance was lost at the beginning of the downtrend on May 8th and has yet to be breached. Additionally, the upper resistance level at $27,500 proved challenging for BTC, as it was unable to clear it.
according For cryptocurrency analysis firm Material Indicators, the cryptocurrency market continues to be spurred by the fear, uncertainty and doubt (FUD) surrounding the industry. With tender bidding liquidity, Bitcoin is retesting the 200-week moving average (MA).
Bitcoin Faces a Critical Test, Will the 200 Weeks Moving Average Hold?
According to material indicators, if the 200-week moving average does not hold, another re-test of the 50-month moving average may take place. Physical indicators suggest that if this happens, liquidity and sentiment at the 50-month moving average will be stronger, which could lead to a bullish reversal in the market.
However, it is important to note that a “rug pull” at $25,000 – a sudden and large drop in Bitcoin’s price – could lead to a bear market and a retest of the lower $24,000 and $23,000 levels.
For the bulls, it is imperative to maintain control of the $27,000 level and push BTC price above the next important resistance at $27,500. Doing so would allow the digital currency to make another attempt to reach the key psychological level of $30,000, which it has not achieved since April 19th.
In the same vein, according For Baro Virtual, the author of Crypto Quant, the leverage ratio is too high, which could send the price of BTC down to $24,000.
The leverage ratio refers to the borrowed funds that traders use to invest in BTC. When the leverage ratio increases, traders take out more debt to invest in cryptocurrency. This can lead to a higher level of risk in the market, as a sudden drop in the price of BTC can trigger a large amount of selling, which leads to a drop in the price.
The bullish engulfing pattern for BTC indicates buying opportunities
according For CJ, the cryptocurrency trader, there are several points he leans towards that potentially present opportunities to buy BTC.
CJ notes that BTC has seen a range of divergence, a lower retracement, and a daily bullish engulfing pattern. These indicators indicate that any dips in the FVG (Fair Value Gap) are buying opportunities, with a liquidity target between $29,000 and $30,000. However, a close below $26,100 would be bearish for the cryptocurrency.
Recent bitcoin price movements have left traders and investors unsure of what to expect in the near term. While the cryptocurrency initially showed a bullish reaction to the fair value gap, with a bullish 4-hour candle, it is now turning back.
It remains to be seen if BTC can bounce back from the 200-week moving average or if a sudden and massive drop in price will push BTC into a new price order and visit lower levels.
Despite the uncertainty in the market, BTC is currently trading above key levels and needs to close above $26,000 to expect the bullish trend to continue. Bitcoin’s gains over the past 24 hours have narrowed to just 0.8% after recovering 8% in the past few days.
Featured image from iStock, chart from TradingView.com