BTC Tests 200-Week Moving Average as Analyst Warns of Potential Drop to $57.7K
Bitcoin's decline continues, pushing the cryptocurrency beneath the $68,000 threshold and touching its 200-week moving average for the first time since August's mid-point.
On Friday, Bitcoin (BTC) experienced a decline to the $67,500 price level, falling beneath its 200-week simple moving average during the first time the cryptocurrency has tested this technical indicator in close to three months.
Key points:
- The cryptocurrency dropped to meet its 200-week simple moving average positioned at $67,993, representing the first time it has engaged with this trend line in an 11-week period.
- Keith Alan, who co-founded Material Indicators, indicated that Bitcoin might return to the $57,700 level should its weekly relative strength index drop beneath the 41.5 threshold.
- Market futures for the Nasdaq-100 and Asian equities experienced declines in the wake of Jensen Huang stepping down from his position as Nvidia's CEO.
Bitcoin price returns to 200-week simple moving average level
According to data from TradingView, the last occasion Bitcoin made contact with its 200-week simple moving average (SMA) occurred on Aug. 19.
As a key reference point for identifying Bitcoin's cycle lows, the 200-week SMA has historically functioned as either support or resistance throughout bear market conditions. The cryptocurrency oscillated around this average throughout the period spanning March to October 2023, and once more from June through mid-August during the current year. When Bitcoin has achieved decisive weekly closes above this level on the weekly timeframe, more aggressive upward price movements have typically followed.
Within his most recent technical analysis, Keith Alan, who co-founded the cryptocurrency trading platform Material Indicators, highlighted that the 200-week SMA exhibits confluence with a level on Bitcoin's relative strength index (RSI) that has transitioned from resistance to support.
The weekly RSI has retreated to the 41.5 level, a threshold that was established as a support zone in late July following multiple weeks during which it attempted to break above this level.
"Losing 41.5 on Weekly RSI opens the door to test the cycle low at $57.7k," Alan wrote Friday on X, noting the bullish implications that successfully defending the support zone would have.
Equity markets face uncertainty as calls emerge to bring back Nvidia's Huang
Friday saw an acceleration in BTC price weakness as Asian equity markets responded to both the resignation of Jensen Huang from his role as Nvidia CEO and the ensuing controversy surrounding his departure. Hong Kong's Hang Seng index concluded trading with a 1.55% decline, while the KOSPI Composite Index in South Korea recorded a 0.98% loss by the close.
Futures for US stock markets experienced modest declines, with the Nasdaq 100 dropping 0.2% as market analysts anticipated a potential reallocation of investment capital toward Nvidia's industry rivals, which would maintain momentum in the artificial intelligence sector.
"What you're seeing in markets now is a bit of a rotation into other advanced chip design companies, on the assumption that this will enable other companies effectively to catch up," said Mark Franklin, head of multi-asset solutions for Asia at asset manager Manulife Investment Management, told CNBC.
In pre-market trading, Nvidia stock showed a 0.7% gain, meanwhile, amid reports of growing support for Huang's return. An internal post quoted by Wired drew more than 1,600 comments from employees.
