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Bitcoin Price Has 8 Hours to Close Above Crucial $5,500 Level: Why It’s Important

Avatar Nick Chong 3 months ago

Bitcoin has had a tough week, to say the least; after peaking at $9,200 on Saturday, the cryptocurrency started a precipitous decline, falling through support level after support level as if they were irrelevant.

Indeed, at the crash’s worst on Friday morning, the cryptocurrency had reached a price as low as $3,800 (or $3,200 on some trading pairs/swaps), easily breaking through every single relevant level for Bitcoin up to that point.

Despite this, bulls have a chance to recover a key moving average that has acted as support for the cryptocurrency over the past five-odd years. BTC holding this level when the weekly close takes place in approximately eight hours (as of the time of this article’s writing) would mark the start of a potential full-blown bullish reversal, meaning $3,800 could have been the bottom.

Bitcoin Must Hold the 200-Week Moving Average

While Bitcoin seemingly moves without rhyme or rhythm, its price action isn’t entirely irrational; below is a TradingView chart of BTC’s price action from 2015 to the middle of 2019, along with the 200-week simple moving average of the price.

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As can be seen below, this specific moving average has marked the bottom for Bitcoin at least four times over the time period, with the asset never failing to close its weekly candles above this level. It isn’t clear why this trend exists, though the S&P 500 also never lost its 200-week moving average over the same time period.

So it’s fair to say investors were shocked on Friday when Bitcoin did the unimaginable; it crashed below the 200-week moving average in a convincing fashion, plunging as low as $3,800 as investors began panic-selling, seemingly anticipating that the crypto industry’s decade-long run was coming to an end. What’s crazy is that there was no resistance at the level.

Fortunately, BTC has since recovered to $5,300. This means that as it stands, Bitcoin is $200 — or around 3.7% — shy of the 200-week moving average.

Considering the historical importance of the level, the cryptocurrency managing to slightly rally into the weekly close to hold the moving average will be a win for bulls.

Featured Image from Shutterstock
Nick Chong

I am a writer who has been following the cryptocurrency space since 2013. A focus of my coverage has been the financialization and mainstream adoption of Bitcoin. My insights and interviews have been featured in leading...

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