Bitcoin dips 5% to key support in 'moment of truth' for crypto market

Bitcoin (BTC) fell sharply after the May 24 Wall Street open as a “long awaited retest” of key trend lines materialized.

Bitcoin abandons uptick to retest moving averages

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $26,154 on Bitstamp — its lowest since May 12.

The latest action was a world away from just the day prior, when upside formed the main story for the market and Bitcoin was aiming for $27,500.

Rangebound volatility was thus the name of the game on the day, while traders eyed key levels for bulls to protect going forward.

These came in the form of the 100-day and 200-week moving averages (MAs), both already a topic of conversation in recent weeks.

“We are getting a long awaited retest of the 200-Week Moving Average. IMO, this is the MOST important level for BTC bulls to hold,” monitoring resource Material Indicators summarized to Twitter followers.

Michaël van de Poppe, founder and CEO of trading firm Eight, further noted the 200-week MA and exponential MA coming into play for the total cryptocurrency market capitalization.

This he described as a “moment of truth” for the chart.

Total market capitalization for #Crypto is getting into the areas of the 200-Week MA and EMA.

Moment of truth is coming up.

Breaking beneath, and some additional harm will be there. pic.twitter.com/g1HW05Pmgb

— Michaël van de Poppe (@CryptoMichNL) May 24, 2023

Popular trader Daan Crypto Trades, meanwhile, eyed long positions returning to the market at the lows just hours after the downside began. Longs “buying the dip” had been a characteristic feature of recent local lows.

“Bybit Open Interest already almost back to where it was before this long squeeze. Seems like quite a lot of longs instantly re-entering,” he commented.

Debt ceiling woes mount

United States equities also lost at the open amid concerns over markets’ reaction to the Biden administration’s debt ceiling stalemate.

Related: $160K at next halving? Model counts down to new Bitcoin all-time high

For trading platform QCP Capital, now was the time for caution for Bitcoin bulls.

BTC/USD “holding up” — acting in a tight range — despite the uncertainty increased the chances of a catch-up correction, it warned in a market update on the day. The ultimate result, however, would depend on the resolution of the debt ceiling problem.

“Although our medium-term bias is for higher BTC, on a deal scenario — we think BTC could quickly sync back with what other macro markets are implying,” it summarized.

“On a ‘no-deal’ scenario however, we will easily take out the year’s highs.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.