Bitcoin (BTC) Tanks Another 3%, Here’s The Key Metric to Focus

Bitcoin and the broader crypto market have been on a downward trend this week and now for the fifth consecutive day in a row. The BTC price is trading 3% down in the last 24 hours and is currently trading at $22,785 with a market cap of $435 billion.

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

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

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-Equity Correlation to Continue

Bitcoin and the broader crypto markets have been closely following the movements on Wall Street this year. Also, the current macro setup looks quite uncertain with fears of the impending recession still staying high.

The Fed is more likely to proceed with interest rate hikes in order to bring the soaring inflation under control. As a result, the equity market will continue to face the heat of the quantitative tightening measures. Jamie Douglas Coutts, senior market structure analyst at Bloomberg Intelligence, wrote:

“In the short term, correlation risks are heightened as equities, especially technology names, are delicately poised at key resistance levels”.

Another warning sign for Bitcoin investors is that the accumulation by long-term investors has slowed down a lot. Genesis’s Ainsley To, Marc Chan and Noelle Acheson wrote: “After a steady climb in the first half of 2022, the amount of Bitcoin that has not moved in over a year has leveled off, signaling a pause in the accumulation behavior of longer-term investors”.

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