3 - 6 minute read
Key Trend Lines are Retested
Bitcoin (BTC) took a sharp dip on May 24, after the Wall Street open as a “long-awaited retest” of key trend lines materialized, leaving traders wary of the market’s future. BTC/USD hit $26,154 on Bitstamp, its lowest since May 12, according to data from Cointelegraph Markets Pro and TradingView. Traders are now looking to protect key levels for bulls going forward, which came in the form of the 100-day and 200-week moving averages (MAs), both of which have been a topic of conversation in recent weeks.
“We are getting a long-awaited retest of the 200-Week Moving Average. IMO, this is the MOST important level for BTC bulls to hold,” monitoring resource Material Indicators summarized on Twitter.
Michael van de Poppe, CEO of trading firm Eight, described the 200-week MA and exponential MA as a “moment of truth” for the total cryptocurrency market cap. Total market capitalization for #Crypto is getting into the areas of the 200-Week MA and EMA. Breaking beneath may lead to further harm.
Total market capitalization for #Crypto is getting into the areas of the 200-Week MA and EMA.
— Michaël van de Poppe (@CryptoMichNL) May 24, 2023
Moment of truth is coming up.
Breaking beneath, and some additional harm will be there. pic.twitter.com/g1HW05Pmgb
Popular trader Daan Crypto Trades, meanwhile, eyed long positions returning to the market at the lows, just hours after the downside began. Longs “buying the dip” had been a characteristic feature of recent local lows.
Debt Ceiling Woes Mount
United States equities also lost at the open, amid concerns over markets’ reaction to the Biden administration’s debt ceiling stalemate. For trading platform QCP Capital, now was the time for caution for Bitcoin bulls. BTC/USD “holding up” despite the uncertainty increased the chances of a catch-up correction, it warned in a market update on the day. The ultimate result, however, would depend on the resolution of the debt ceiling problem.
“Although our medium-term bias is for higher BTC, on a deal scenario – we think BTC could quickly sync back with what other macro markets are implying,” it summarized. “On a ‘no-deal’ scenario however, we will easily take out the year’s highs.”
The Bottom Line
Bitcoin’s sharp dip on May 24 has left traders wary of the market’s future. As the cryptocurrency retests key trend lines, traders are looking to protect key levels for bulls going forward. The 200-week MA and exponential MA are described as a “moment of truth” for the total cryptocurrency market cap. Traders are advised to proceed with caution as the ultimate result of the debt ceiling stalemate remains unclear, with a “no-deal” scenario possibly leading to taking out the year’s highs.
