Bitcoin Brace for 50-Month MA Retest, Is Rage Pull Imminent?

Over the past 24 hours, Bitcoin (BTC), the largest cryptocurrency in the market by capitalization, has again failed to consolidate above the $27,000 level. This key resistance was lost at the start of the decline on May 8 and has not been breached. Additionally, the overhead resistance level placed at $27,500 has also proved to be a challenge for BTC, as it has been unable to overcome it.

According For crypto analysis firm Material Indicator, the crypto markets continue to be driven by fear, uncertainty and doubt (FUD) surrounding the industry. With thin bid liquidity, bitcoin is retesting the 200-week moving average (MA).

Bitcoin Critically Tested, Will the 200-Week MA Hold?

According to material indicators, if the 200-week MA fails to hold, there could be another retest of the 50-month MA. Material indicators suggest that if this happens, liquidity and sentiment will strengthen at the 50-month MA, potentially triggering a bullish market reversal.

However, it is important to note that a “rag pull” – a sudden and significant drop in the price of BTC at $25,000 – could lead to a bearish market and a further retracement to the $24,000 and $23,000 lows.

For the bulls, it is important to maintain control of the $27,000 level and push BTC price above the next important resistance level of $27,500. Doing so would allow the cryptocurrency to make another attempt to reach the key psychological level of $30,000, which it has not achieved since April 19.

On the same note, According Baro Virtual, a crypto quant writer, the leverage ratio is heating up, potentially driving BTC price down to $24,000.

The leverage ratio refers to the borrowed funds that traders use to invest in BTC. When the leverage ratio increases, traders take on more debt to invest in cryptocurrency. This can lead to a high level of market risk, as a sudden drop in the price of BTC can trigger a large amount of selling, resulting in a price drop.

BTC’s bullish engulfing pattern signals a buying opportunity

According For cryptocurrency trader CJ, there are several points he is leaning towards that could potentially provide BTC buying opportunities.

CJ notes that BTC has experienced low divergence and recapture and a daily bullish engulfing pattern. These indicators suggest that any dip in FVG (Fair Value Gap) is a buying opportunity with a target of $29,000-$30,000 liquidity. However, there will be a bearish turn below $26,100 for the cryptocurrency.

Bitcoin’s recent price action has left traders and investors unsure of what to expect in the near term. While the cryptocurrency initially showed a bullish response to a reasonable price gap with the 4-hour candle, it is now retreating.

It remains to be seen whether BTC can bounce off its 200-week moving average once again or if a sudden and significant drop in price will push BTC into a new price regime and head lower.

Despite the uncertainty in the market, BTC is currently trading above key levels, and it needs to close above $26,000 to hope to continue the upward trend. BTC’s gains in the past 24 hours have been limited to just 0.8% after recovering 8% over the past few days.

Featured image from iStock, chart from TradingView.com