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Bitcoin drops for a third straight day

written by Bella Palmer
bitcoin-drops

The crypto currency slipped below the average's $58,492 level to below $57,300, a price last seen on May 2

Bitcoin's decline gathered pace as the largest crypto currency declined for a third consecutive day, dropping below the 200-day simple moving average (SMA), a good indicator of long-term price trends in both traditional and crypto markets.

The crypto currency slipped below the average's $58,492 level during European hours on Thursday to below $57,300, a price last seen on May 2, as per data on charting platform TradingView.

Markets that consistently trade below the 200-day average are said to be in a downtrend, while those trading above the average are considered bullish. Bitcoin rose past the 200-day SMA in October, when the average value was $28,000. The breakout – on expectations of a spot bitcoin ETF in the U.S. – paved the way for a rally to record peaks above $70,000 by March.

As rates drop, the attraction of riskier investments like crypto currencies increases. The minutes of the Fed meeting released Wednesday showed policymakers led by Chairman Jerome Powell do not want to reduce rates until more data emerges to give them greater confidence that inflation is moving sustainably to their 2% target. That may come as early as tomorrow, when the Labor Department releases its non-farm payrolls (NFP) figure for June.

We believe hawkish comments from Jerome Powell and the ongoing selling pressure are likely to push Bitcoin down to 52,000, stated Valentin Fournier, a digital assets analyst at advisory firm brn. However, we recommend viewing this as a buying opportunity, as improving regulations around crypto currencies 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.

The sell-off may run out of steam if the payrolls data shows the labour market weakened in June. The number is forecast to show payrolls rose by 195,000, a notable decline from 272,000 a month before, as per FXStreet. The jobless rate is forecast to have held steady at 4.0%, while average hourly earnings are projected to have slowed to 3.9% from 4.1% year-on-year.

Bitcoin's latest decline below the 200-day line has put the focus on the bull market trendline support at $57,590.

A close below that level could lead to further selling and downward price momentum, as traders often use trendline breakdowns as indicators to make trading decisions.

Disclaimer:

The opinions expressed by our writers are their own and do not represent the views of UK Investment Guides. The information provided on UK Investment Guides is intended for informational purposes only. UK Investment Guides is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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