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Bitcoin (BTC) drops another 3%, here’s the key metric to focus on

Bitcoin and the broader crypto market are in a downtrend this week for the fifth straight day. BTC price is down 3% in the last 24 hours and it is currently trading at $22,785 with a market cap of $435 billion.

The focus has now shifted to its 200-week moving average (WMA) as Bitcoin trades near $23,000. In a note to investors on Thursday, Craig Erlam, senior market analyst at Oanda, writes:

“The rally that took it back to $25,000 has lost significant momentum and that may start to weigh more on the price” of Bitcoin. “A move below $22,500 could indicate that the rally has run its course for now.”

Courtesy: Bloomberg

On the other hand, crypto market analyst Lark Davis also points out that Bitcoin has lost “RSI uptrend, bearish MACD cross, losing 50-day EMA right now” in the last 24 hours.

#bitcoin lost RSI uptrend, bearish MACD cross, just lost 50-day EMA… pic.twitter.com/fdsfB2ykPQ

— Lark Davis (@TheCryptoLark) August 18, 2022

Bitcoin-Equity Correlation Continues

Bitcoin and the broader crypto markets have closely followed movements on Wall Street this year. Also, the current macro setup looks quite uncertain as fears of the upcoming recession are still high.

The Fed is more likely to continue raising interest rates to contain rising inflation. As a result, the stock market will continue to experience the heat of quantitative tightening. Jamie Douglas Coutts, senior market structure analyst at Bloomberg Intelligence, wrote:

“Near-term, correlation risks are heightened as stocks, particularly technology stocks, moderately balance at key resistance levels.”

Another red flag for Bitcoin investors is that accumulation by long-term investors has slowed sharply. Ainsley To, Marc Chan and Noelle Acheson of Genesis wrote: “After a steady rise in the first half of 2022, the amount of bitcoin that hasn’t moved in over a year has leveled off, signaling a pause in longer-term accumulation behavior Investors”.

Top cryptocurrencies like Bitcoin and Ethereum (ETH) are still trading at a 50% discount year-to-date. However, recovery rallies have seen jumps of between 50% and 100% from their June lows.

Bhushan is a FinTech enthusiast and has a keen sense of understanding the financial markets. His interest in economics and finance draws his attention to the emerging blockchain technology and cryptocurrency markets. He is constantly in a learning process and motivates himself by passing on the knowledge he has acquired. In his free time, he reads thriller fiction novels and sometimes explores his cooking skills.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication assumes no responsibility for your personal financial loss.

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