Bitcoin price crumbled overnight as it fell below the $58,000 range, the first of its kind since early May amid extended bearish sentiment.
The price of Bitcoin (BTC) has seen a sizable fluctuation in the last 24 hours, raising speculations amongst investors. The leading cryptocurrency is currently trading at $57,534.24 with a 4.3% drop within the last 24 hours. This marks the third day of consecutive price fall for the digital currency and a drop below the 200-day Simple Moving Average (SMA).
Bitcoin Follows Downward Trend
Markedly, the 200-day SMA is a good indicator of long-term price trends in both traditional and crypto markets. During Thursday’s European hours, Bitcoin went below the average of $58,492 to less than $57,300. This price level was last seen on May 2, per data from TradingView. Usually, when the market trades below the 200-day SMA constantly, it is assumed to be following a downtrend pattern.
In contrast, those that trade above the average are considered as heading in a bullish direction. One such time was in October when BTC’s average price was about $28,000. The anticipation for spot Bitcoin ETF which eventually came in January, and the October breakout pushed Bitcoin price to an All-Time High (ATH) of more than $73,000.
Significantly, the United States interest rate, which is usually decided by the Federal Reserve, is crucial to the price of Bitcoin. A fall in interest rates triggers a higher attraction to riskier investment alternatives like digital assets. In the last Federal Reserve meeting, policymakers led by Chairman Jerome Powell decided that they would not pursue any rate cut for now.
At least, not until more data emerges to give them greater confidence that inflation is moving sustainably to their 2% target. The Labor Department non-farm payrolls figure for June is scheduled for release on Friday. This may be data that the policymakers need to make another decision on interest rate cuts.
BTC Lifeline Hangs on Powell’s Comment
In an email, Valentin Fournier, a digital assets analyst at advisory firm brn, noted that Bitcoin could go as low as $52,000. For Fournier, this sentiment would be propelled by the hawkish comments from Jerome Powell and the ongoing selling pressure.
“However, we recommend viewing this as a buying opportunity, as improving regulations around cryptocurrencies and cooling inflation in the US have not been fully priced in and are likely to bring strong momentum once investors shift focus to a longer-term vision,” he added.
At the same time, weakened payroll data for the Labour Market data could give rise to a drop in selloff. The expectation is that the payrolls will increase by 195,000 which will be a significant slowdown from the 272,000 that was recorded in the previous month.
With all of these potential prospects, Bitcoin Marxists like Robert Kiyosaki, Michael Saylor, founder of MicroStrategy, and El Salvador still believe that buying Bitcoin is the best hedge an investor can have.
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