Bitcoin price briefly touched over $25,000 per coin today, before pulling back late in the day. The rally took Bitcoin price precisely to both the 50-week and 200-week moving averages that have recently “death crossed.”
Will the top cryptocurrency make it through the resistance and add more validity to a blossoming bull market, or will the rally suffer a rejection at the “deadly” dynamic resistance level?
Bitcoin Faces Off With Death Itself
To say that Bitcoin price is retesting a critical resistance level would be an understatement. BTCUSD weekly price action has pushed directly into the highly publicized “death cross” of the 50-week and 200-week moving averages — the first one in Bitcoin’s history.
The death cross signal itself is bearish, and because it’s never happened before, even bulls should be weary of how the market reacts at this key level. A death cross typically tells investors that the longer term trend is possibly changing.
Moving averages send several other signals to the technical analyst — a crossover is only one. A moving average turning up or down after an extended trend is another. Finally, passing above or below a moving average is yet another possible signal.
R.I.P. Or Time To Rip Higher?
In addition to providing potentially useable signals, moving averages act as dynamic support and resistance. A cluster of moving averages suggests a strong area of support or resistance. And because of that, whatever happens next will send an important message to the market.
Bitcoin passing above the duo of dynamic resistance levels could flip them into support and cement the idea the bear market is over. Meanwhile, rejection from the key resistance level could be demoralizing for bulls and give bears the upper hand to push cryptocurrencies to dramatic new lows.
The fate of the next several months of price action could be decided with the outcome of this important inflection point. The death cross itself hasn’t yet confirmed until the Sunday evening, giving bulls less than 72 hours to rise substantially above the two moving averages for a chance to avoid it.
After touching the moving averages initially today, Bitcoin suffered a more than $1,000 correction back to below $24,000. Although historically Bitcoin has always narrowly avoided the crossover, the lack of time left to avoid the death cross make a confirmation likely.