Bitcoin (BTC) is facing a sink-or-swim resistance test to confirm its “macro breakout,” according to new analysis.
in one tweet On Feb. 2, on-chain monitoring resource Material Indicators marked key levels that should flip to support after BTC/USD surged above $24,000.
Bitcoin price preparing for trendline showdown
In what was ultimately a boon for bitcoin bulls, the Federal Reserve delivered on Feb. 1, which is what risk-taking traders wanted to hear.
With Chairman Jerome Powell using the word “disinflation,” hopes for an earlier end to rate hikes and a return to easier monetary conditions immediately began to take their place.
Sentiment was felt across crypto, with BTC price action reversing an initial decline to record fresh six-month highs of $24,250 on Bitstamp.
While a subsequent correction took the largest cryptocurrency down around $500, sentiment has remained upbeat ever since.
However, for the good times to continue, Material Indicators believes that BTC/USD must now address two trendlines that have been forming resistance for much of 2022.
These are the 50-week and 200-week moving averages (WMAs) that bulls have so far failed to retest, much less flip them to support.
The 50WMA and 200WMA are currently at $25,345 and $24,837, respectively, data from Cointelegraph Markets Pro and TradingView confirms.
“[BTC] need to test key moving averages to confirm macro breakout or fake,” reads part of the comment.
An accompanying chart showed the state of Binance’s order book at the time, with resistance shifting higher to allow the spot price to rise with it. As Cointelegraph reported, this phenomenon was already playing out before the Fed event.
BTC/USD order book data (Binance) annotated chart. Source: Material Indicators/ Twitter
Material Indicators described the subsequent surge in BTC price as a “herd of bulls stampede through the gate” in the absence of resistance pressure.
“Whether it’s going to the slaughterhouse or the auction house TBD at 50WMA and 200WMA,” he added.
“Great Signs” and “Joker”
Currently, BTC/USD has spent longer than ever below the 200WMA, a key aspect of its 2022 bear market that sets it apart in its history.
Related: Best January since 2013? 5 things to know in Bitcoin this week
In addition, the two WMAs in focus form a so-called “death cross” where the falling 50WMA crosses the 200WMA.
If that happens, analysts fear it could trigger fresh downside moves like events on shorter timeframes have seen before.
“Risk assets have undoubtedly been correlated, but BTC outperformed TradFi with a 40% rally in January,” said Keith Alan, co-founder of Material Indicators. commented before the fed.
“Now SPX has a triple spike on the Monthly and BTC is headed for a death cross on the Weekly. These are great signs, but the FED, FANG and the labor market are playing wild cards.”
BTC/USD 1-week candlestick chart (Bitstamp) with 50, 200MA. Source: TradingView
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