Reason to trust
How Our News is Made
Strict editorial policy that focuses on accuracy, relevance, and impartiality
Ad discliamer
Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.
Bitcoin has finally started to show some signs of weakness after stagnating above $7,500 for days on end, recently dipping under the key support in and around $7,400. As of the time of writing this, the cryptocurrency is trading for $7,350 on many major exchanges, posting a 2% loss in the past 24 hours.
Related Reading: Bitcoin’s Chart Looks Eerily Similar to $3,000 Bottom; Is the Pain Over?
While a 2% loss doesn’t seem decisively bearish, a leading analyst has said that a loss of the $7,400 price level, which currently doubles as the 100-period simple moving average for the four-hour chart, could imply that a strong drop in the Bitcoin price is coming. Here’s why.
Bitcoin Needs to Hold $7,400?
Nunya Bizniz, a popular cryptocurrency trader, recently noted that the 100-period simple moving average for Bitcoin has been a level of utmost importance over the past few months. He wrote that “For the past handful of months, a close above or below the 100ma has been indicative of continuation.”
BTC 4hr:
For the past handful of months, a close above or below the 100ma has been indicative of continuation.
Price is currently below the 100ma, however 3 hours remain until close of current candle.
Kind of important area. pic.twitter.com/1prDOPVYpj
— Nunya Bizniz (@Pladizow) December 9, 2019
Indeed, as Bizniz illustrated in the chart above, a price cross below the level always preceded massive price drops of anywhere from 10% to 20%, save for one occasion where only a 3% drop ensued.
Right now, BTC looks poised to break below that moving average, with bulls failing to keep up with bears. Should historical price action be of any current relevance, a close under $7,400 in around 30 minutes’ time (from the time of this article’s publishing) will show that the leading cryptocurrency could plunge by 10%, or maybe even more.
$7,400 is also important because it was the place where Bitcoin bottomed late in October, prior to the 40% jump to $10,500. As the below analyst pointed out in the tweet seen below, his bullish bias will break if BTC manages to close under $7,400.
At a critical level. Break below (above on inverse chart) 7400 and my bias reverses. Price hasn't broken down so still cautiously optimistic about an upward move pic.twitter.com/pFga46VAUh
— MrChief (@HaloCrypto) December 9, 2019
While the short-term outlook for Bitcoin may be about to flip bearish again, some say that the medium to long-term directionality for the cryptocurrency remains in bullish territory.
Adaptive Capital partner Willy Woo recently noted that on-chain momentum, which the popular analyst has long claimed is correlated with Bitcoin’s macro price trends, is “crossing into bullish” territory after a multi-month downturn.
With this in mind, he asserted that the “bottom is most likely in,” meaning that any move lower than the $6,500 plunge “will be just a wick in the macro view.” He added that the unnamed indicator also implies that cryptocurrency investors will start to front-run the impending “halving,” the block reward reduction that will be taking place in May 2020.
Related Reading: Last Weekly Golden Cross Led Bitcoin to Rally 75% Rapidly; Will the Same Happen Now?
Featured Image from Shutterstock
