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Bitcoin clings to $42K as key moving average break from July reappears

Bitcoin clings to $42K as key moving average break from July reappears
Written by publisher team

Bitcoin (BTC) consolidated above $42,000 before the opening bell on Wall Street on January 7, with more similarities emerging to last year’s lows.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

BTC mimics May’s behavior ‘very closely’

Data from Cointelegraph Markets Pro and TradingView tracked the nervous Bitcoin market as BTC/USD avoided another retest of the $40,000 support.

Earlier, after a brief dip below $41,000, analysts warned of the possibility of another capitulation event, which could drop the pair to $30K or even lower.

That number appears to hold true for market participants, after they bottomed out the prolonged capitulation that ran from May to July last year.

Then, as now, the miners’ revolution combined with macroeconomic factors to temporarily take the momentum out of the bitcoin bull market.

“BTC is following May 2021 closely,” noted trader and analyst Rekt Capital in a series of tweets about the current price action.

He noted that as of Friday, BTC/USD was breaking out of the 50-week exponential moving average (EMA) – just like the mid-July move that marked the bottom of that capitulation phase. The 50-week EMA sat at $45,000 per day.

Meanwhile, Cointelegraph contributor Michael van de Poppe pointed out the differences between the two phases.

A “quick correction south” this time means that the prolonged sideways movement and breakout to the upside from 2021 do not characterize the current market in general.

“The $46,000 level remains a very important thing to watch,” he said during his recent YouTube update. “If there is a break, I think the entire bear market is over or the entire correction is over and we are looking at the possibility of an upside.”

Ethereum trader has $2200 buy chart

Altcoins also had trouble on the day, after warnings that any previous strong moves were likely a red flag – a bull trap.

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Ether (ETH), the largest altcoin by market cap, is trading 4.5% at the time of writing to nearly $3,000 – down $700 in a week.

ETH/USD (Bitstamp) one day candle chart. Source: TradingView

Some of the top ten cryptocurrencies by market capitalization have escaped a downtrend, with Cardano (ADA) up 1.2% at $1.23 and XRP flat.

Bentoshi is still very cautious specified Lows as low as $2,200 to buy ETH, with it expected to reach “some point this year.”