Bitcoin is currently encountering a critical situation as it faces a convergence of three significant moving averages on its daily chart, following a notable rebound early in the week. This convergence has raised the stakes for the cryptocurrency, as analysts suggest that the ability to reclaim these moving averages may play a pivotal role in determining the momentum of its ongoing bull run.
In a recent analysis, Keith Alan, co-founder of trading resource Material Indicators, emphasized the importance of monitoring the next daily closes for Bitcoin. Despite having seen a striking rise from around $109,000 to kick off the week, traders are advised to remain cautious, as the bulls still have challenges to overcome. Alan noted that a cluster of simple moving averages (SMAs)—specifically the 21-day, 50-day, and 100-day SMAs—has all converged in a relatively small area corresponding to the current spot price of Bitcoin.
At present, Bitcoin is trading just above the 50-day SMA, while still trailing the other two key moving averages. Alan pointed out that while it had successfully closed above all three SMAs on Monday, it is crucial to consider how the price interacts with these averages moving forward. “It’s not how you start the day, it’s not even what’s happening in the middle of the day; it’s how you finish,” he remarked, underscoring the importance of closing prices.
In light of this volatility, the week ahead is marked by several potential catalysts that could significantly influence Bitcoin’s price trajectory. Economic data releases from the United States are scheduled throughout the week, with much of it focusing on employment metrics. Given that a sluggish labor market is a pressing concern for policymakers, these figures may ultimately impact the Federal Reserve’s decisions regarding interest rate cuts.
Adding to the uncertainty is the looming threat of a potential government shutdown in the United States, set to begin on October 1st, which could further affect the performance of risk assets like Bitcoin. As analysts look ahead to the upcoming monthly and quarterly candle closes, the expectation is that Bitcoin must demonstrate strength to maintain upward momentum.
“A daily candle close above the 21-Day SMA would signify strength, but only if it holds through the monthly open,” Alan remarked, framing the upcoming days as critical for Bitcoin’s prospects.
