Since the start of the week, Bitcoin price has rallied from a retest of lows around $7,700 to $8,700 – gaining over $1,000 in value during the short timeframe.
The rise in Bitcoin price was also yet another retest of the asset’s 200-day moving average, and what happens from here could determine the trend ahead. Will Bitcoin return to its bull market, or will the leading cryptocurrency by market cap fall further to find new lows, putting any chance at a bull market in jeopardy?
Bitcoin Price Retests Recently Lost 200-Day Moving Average
Throughout the entire 2016-2017 bull run, Bitcoin price was supported by the 200-day moving average and didn’t close a candle below it. It was among the few indicators giving crypto investors hope that the recent triangle formation would break upward, causing Bitcoin to continue on its bullish rally.
But the recent triangle formation broke down instead, and much to the fears of bullish crypto traders, the 200-day moving average was broken below, with many consecutive candle closes below it. Bitcoin price made a pair of reattempts to get through it but was ultimately rejected back down to a local low around $7,700.
After the most recent test of that low, Bitcoin price rocketed upward nearly $1,000 in a matter of a few days and is making its best attempt yet at breaking back above the 200-day moving average, and if it is able to close back above it, the correction may already be over.
— Walter Wyckoff (@walter_wyckoff) October 9, 2019
However, if Bitcoin cannot break above the 200-day moving average, and is rejected, one crypto analyst jokingly suggests that ramen noodles a mainstay of low-income college students will be on the menu for some time to come.
The 50-Day Moving Average And Potential Death Cross Approaches
If Bitcoin can indeed get through, it’ll have the 50-day moving average as the next obstacle it faces. The other notable moving average often used by crypto analysts, is currently resting at about $9,500 – a range that was heavily defended by bulls before the breakdown occurred.
But if Bitcoin price is rejected by the 200-day moving average, the 50-day moving average will begin to fall further, and draw closer and closer to making a death cross an occurrence where a short-term moving average falls below a long-term moving average, typically signaling the asset is a sell.
The last time the death cross occurred, was back in April 2018, and it resulted in over a year of a bear market before it crossed back up making a golden cross in April 2019 at the start of the parabolic rally.