BitcoinThe price of has been trending close to the 100-week simple moving average (SMA) line, which it has been maintaining for the last three weeks. In technical analysis, the level representing the approximately two-year average is a long-term support that bullies see as the last line of defense. The price’s retreat from record highs above $126,000 has turned the market’s attention to that average. Largest publicly traded Bitcoin investor in the same period StrategyShares of (MSTR) fell below a similar confidence line, setting a negative precedent for the largest cryptocurrency.
Why Is the 100-Week Average Critical for Bitcoin?
100 weeks for Bitcoin SMA A widely used reference among technical analysts looking for a breakout or continuation signal in the price’s main trend. Maintaining the line on the largest cryptocurrency side for the last three weeks indicates that the decline has been curbed for now. Bullish advocates can interpret the possible reaction from the average as a trampoline effect and price the possibility of a new recovery.
If the level breaks downwards, psychology can quickly reverse. While investors who are under selling pressure may tend to reduce their positions, bearish investors may also regain confidence and trigger harsher withdrawals.
Why Does Strategy Give a Warning Signal?
Strategy sharesfalling below the 100-week SMA line in November, showing how a similar scenario could play out in the equity market. MSTR fell below the average, falling to $220 at the beginning of November. Then the selling wave deepened and the price dropped to $160. The company’s shares attract attention with a loss of more than 60 percent since the peak of $ 457 during the year.
The reason why MSTR stands out as a leading indicator to watch for Bitcoin is that it has previously produced a similar early warning by falling below the 50-week SMA. In other words, if the 100-week average is lost on Bitcoin’s chart, there is a risk that the price will head towards deeper losses, similar to the path seen in MSTR. In the opposite scenario, that is, the price remaining above the average, may strengthen expectations that the support level may be the basis for recovery.
