BTC/USD PRICE OUTLOOK: BITCOIN STRUGGLING BELOW ITS 50-DAY SIMPLE MOVING AVERAGE
- Bitcoin has stayed subdued since invalidating its year-to-date ascending trendline
- BTC/USD price action looks likely to remain under pressure below its 50-day SMA
- The cryptocurrency could search for technical support near the $50,000-price level
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Bitcoin (BTC/USD) has faced headwinds over recent trading sessions. The largest cryptocurrency by market cap plunged roughly -10% this past weekend and has been struggling to regain altitude ever since. This selloff led to a breakdown of the bullish trend that guided Bitcoin higher throughout most of the year. The latest stretch of downside also pushed Bitcoin below its 50-day simple moving average, and this could leave BTC/USD price action vulnerable to further weakness.
BTC/USD – BITCOIN PRICE CHART: DAILY TIME FRAME (27 DEC 2020 TO 21 APR 2021)
Chart by @RichDvorakFX created using TradingView
In our last Bitcoin forecast, we highlighted potential for another breakout that would likely face pushback from bearish divergence on the relative strength index, which came to fruition. Now, it looks like Bitcoin bears have wrestled back control of direction, but the bottom Bollinger Band has provided buoyancy to BTC/USD price action so far. Reclaiming the 50-day simple moving average could increase the odds of a rebound higher, but the negatively sloped 20-day simple moving average still lurks overhead. This brings to focus the $50,000-price level into focus as a more formidable area of technical support for Bitcoin, which is roughly underpinned by its 38.2% Fibonacci retracement and 100-day simple moving average.
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To that end, though the Bank of Canada may be one of the relatively smaller fish in the pond of major central banks, their latest decision to taper weekly asset purchases by C$1-billion seems noteworthy. This rollback of ‘extraordinary monetary support’ reduces the amount of liquidity being injected into the financial system, and arguably, paves the way for other central banks to follow suit down the road. As such, anti-fiat assets like Bitcoin could face headwinds from this less-dovish shift in monetary policy – particularly once the Federal Reserve signals appetite for hopping aboard the taper train. This fundamental driver will likely remain on the backburner for now, however, as more dominant forces, like increasing private sector adoption and threat of regulatory oversight, strongarm the direction of cryptocurrencies.
— Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
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