Bitcoin (BTC) tested the $23,000 level as support at the Wall Street open on August 1, with key moving averages in the spotlight.
The 200-week moving average gets a lot of attention
Data from Cointelegraph Markets Pro and TradingView tracked the BTC/USD pair as bulls and bears battled for control amid a tight trading range.
Bitcoin had inspired with its highest weekly close since mid-June the day before, with its monthly candle also producing the biggest gains since before last year’s $69,000 all-time high.
However, among analysts and traders, what was important was the ability of the market to stay higher for several more candles.
Despite recovering important trend lines like the 200-week moving average (MA) and realized price, Bitcoin would not be out of the woods until it started producing full weekly candles without retesting those levels.
“The bear market rally is still alive and well,” explained that day the on-chain analysis resource Material Indicators.
“To call it another way requires valid breakout confirmations above the key MAs. The 200-week and 50-month are the first to watch for BTC, but only if we have full candles above the line. A wick below invalidates it.”
Therefore, $22,880 and $21,965 were essential lines to hold for the bulls and getting closer to the spot price.
Nevertheless, analyst and trader Rekt Capital predicted that Bitcoin would naturally try to retest the 200-week MA as short-term support.
The new #BTC Weekly Close above the 200-week MA means that price will try to retest this MA as new support this week
BTC already held the MA as support last week, as evidenced by the downside wick
Now it will try to hold it for a second consecutive week$BTC #crypto #bitcoin pic.twitter.com/350VYgi825
— Rekt Capital (@rektcapital) August 1, 2022
BTC’s new weekly close above the 200-week MA means that the price will try to retest this MA as new support this week.
BTC already held the MA as support last week as evidenced by the bearish wick
Now he will try to hold it for the second week in a row
However, commenting on price strength, he pointed that the recovery of the 200-week MA was the first such event after a “prolonged downtrend” since the COVID-19 crisis of March 2020.
“Bitcoin may be struggling to break above the $24,000 level, but its weekly candle finally closed above the 200-week moving average and could improve technical sentiment significantly”, summarized Zain Haider, co-founder of the question and answer platform Blockchain Answerly, in the additional comment.
On-chain activity is “mediocre at best”
With US stock markets flat on the day, Bitcoin and altcoins had little macro pressure to influence price action.
However, the situation remains somewhat uncertain, warned researchers at on-chain analytics firm Glassnode, thanks to the markets continuing to reflect the bearish mood after months of downward trend.
“Both Bitcoin and Ethereum have seen a price rebound this week, following extreme oversold conditions, and spurred by risk-on sentiment following the July FOMC meeting,” they conclude in the latest edition of Glassnode’s weekly newsletter, The Week On-Chain.
“Beneath the surface, however, on-chain transactional demand remains lackluster at best, and this rally has yet to see a convincing follow-up in observable demand activity.”
Glassnode added that on-chain data still represents “only part of the picture,” and that attention must equally be focused on whether the nascent signs of change can endure.
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