Analyst suggests Bitcoin swing trading is the best move as BTC price drops below $40,000

Bitcoin (BTC) price was bullish for a brief while, perhaps prompting some traders to open long positions, before dipping back below $40,000 during the evening trading hours. Let’s take a look at what traders think of the current price action and whether or not today’s brief breakout was nothing more than an overhead stress test.

BTC/USDT 1-day chart. Source: Trading View

Resistance Remains at Major Moving Averages

Analysis of Bitcoin’s weekly price action was discussed by crypto trader and pseudonymous Twitter user “Rekt Capital”, who post the following weekly chart noting that “Bitcoin is now hovering below the green 21-week and blue 50-week bull market exponential moving averages (EMAs).

BTC/USD 1 week chart. Source: Twitter

Rekt Capital said,

“Breakouts beyond these EMAs preceded an immense upside. Turn these bull market EMAs into support and we will see bull market momentum resume.

Bitcoin’s correlation to tech stocks provides insight

Despite all the macro factors affecting global financial markets, Bitcoin remains “stuck in the middle of its $35,000 to $45,000 range according to David Lifchitz, managing partner and chief investment officer at ExoAlpha. Lifchitz noted that BTC has behaved more like a risk asset than a hedge against inflation.

Evidence of this can be found by looking at the highly correlated price action for BTC and the Nasdaq over the past few months.

BTC/USD futures against Nasdaq. Source: Refinitiv

According to Lifchitz, if Bitcoin’s “correlation to speculative tech stocks remains high”, the series of interest rate hikes planned by the US Federal Reserve will at some point become “toxic to risk assets”, which could result in a drop in the price of Bitcoin.

Overall, Lifchitz suggests that for investors convinced of its long-term potential, “bitcoin should be actively traded as it rallies in the range.”

Related: From Beer to Bitcoin as Legal Tender: A BTC Education in Roatán

$42,300 is a crucial level to watch

According to independent market analyst Michaël van de Poppe, $42,300 is the crucial level that must be overcome.

BTC/USD 4 hour chart. Source: Twitter

Van de Poppe said,

“It’s also a daily breaker. If it breaks, I guess a retest of $46,000 is imminent and maybe $50,000.

Further evidence to suggest that BTC may soon rise was provided by analyst and pseudonymous Twitter user “Plan C,” who post the following chart examining the confluence of several analytical metrics for Bitcoin price.

Bitcoin confluence floor model. Source: Twitter

Plan C said,

“The last 4 times the blue and purple lines were below the green line the whole time the Bitcoin bottom was already inside.”

The overall cryptocurrency market capitalization now stands at $1.881 trillion and Bitcoin’s dominance rate is 41.2%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

Garland K. Long