Key Bitcoin Takeaways
- Bitcoin exploded past $61,000 during the weekend session to hit a new record high.
- The cryptocurrency failed to hold the upside momentum as profit-taking intensified.
- It is now trading about 9 percent lower from its sessional top and has hinted at further downside risks after forming a death cross.
The cost to purchase one Bitcoin surged by more than 43 percent after bottoming out near $43,000 in February.
On Saturday, the flagship cryptocurrency established a new milestone high at $61,788, anticipating that Joe Biden’s $1.9 trillion stimulus package, including direct payments of up to $1,400, would prompt retail investors to use the proceeds to buy Bitcoin. But despite the uplifting catalyst behind it, the cryptocurrency market corrected lower anyway.
Traders unwinded their exposure in the Bitcoin market ahead of the Federal Reserve’s two-day policy meeting ending Wednesday — a high-impact event. The central bank officials would discuss whether or not to intervene while the yields on longer-dated US Treasurys rise. A no-intervention policy could send the Bitcoin prices lower as rising yields make holding/buying the US dollar more attractive.
So it appears, traders anticipated the move ahead of the meeting’s conclusion. Bitcoin dropped by almost 9 percent after setting up its record high. Nevertheless, the cryptocurrency avoided a steeper sell-off in hopes that stimulus beneficiaries would raise their bids on the BTC/USD rates.
Amid the ongoing intraday wobbling between profits and losses, Bitcoin formed a death cross.
In retrospect, Death Crosses appear when an asset’s short-term moving average slips below its long-term moving average. This week, Bitcoin’s 20-4H exponential moving average closed below its 50-4H simple moving average. The said 20-50 crossover has historically served as a predictive sell-off indicator, which increases risks of further declines in the Bitcoin market.
The BTC/USD exchange rate slipped 2.5 percent after forming the death cross. In line with its previous reactions to the bearish crossover, the pair risked further decline towards its next downside target at the 20-4H moving average (the orange wave in the chart above). It sits near $51,000.
Meanwhile, a rising trendline slope provided intermediate support to Bitcoin’s bullish bias. A rebound from the price floor could have traders increase their bids for the horizontal resistance above—at around $58,000. An extended move upward would have Bitcoin restest its previous record high.
“Bitcoin still putting in an uptrend on the daily chart,” said Josh Rager, the co-founder of Blockroots.com. “Trendlines are meant to be broken. But as long as [the] price is above $50k (above the previous range), I think this continues to push back up to new highs. People will be calling “the top” at every pullback so get used to it.”