Bitcoin, the world’s largest cryptocurrency by market value, experienced a second consecutive day of losses on Thursday, falling to a 10-day low of $28,300. The decline suggests traders are moving away from risky assets after a strong rally at the beginning of the year. According to TradingView, Bitcoin closed below the 20-day moving average (DMA) on Wednesday, indicating a sign of weakness. Laurent Kssis, a crypto trading adviser at CEC Capital, suggests that the 20-day moving average could trigger further selling pressure. However, Sheraz Ahmed, managing partner at STORM, believes that this could be the start of a healthy correction that encourages further accumulation.
The drop in Bitcoin’s value came after a large sell order on Binance, a crypto exchange, and an unexpectedly high UK inflation figure of over 10% in March. While this pullback may appear negative, it is worth noting that Bitcoin has experienced exceptional growth over the past year, recovering from the mishaps of the past few years.
In traditional markets, Tesla’s shares declined by 8.5% on the day, following the release of the company’s earnings report on Wednesday, which showed a more than 20% drop in net income compared to last year. The Dow Jones, S&P 500, and Nasdaq futures all fell on the day. Craig Erlam, an analyst at foreign-exchange trading firm Oanda, suggests that despite Bitcoin’s rally since the start of the year, the recovery may be running on fumes.
It is worth noting that while the 20-day moving average is a short-term view, it tracks Bitcoin more closely and has less lag than other indicators. This means that it could trigger further selling pressure in the short term. However, a healthy correction may be necessary for Bitcoin to continue its growth in the long term. As with any investment, caution is advised, and investors should consider their risk tolerance and investment goals before investing in cryptocurrency.
