Bitcoin price tests 200-EMA for second day, increasing odds for further move south

• Bitcoin price is testing the 200-day EMA for a second time this week.
• A breakout above $69,000 and holding there with stable price action can lead to a long.
• A retest of $68,000 followed by a healthy rejection can lead to a short toward $60,800.

Bitcoin (BTC) price is devoid of upward momentum, tethered to and testing a critical support as BTC bulls fail to show up on Wednesday. It comes amid anticipation for the halving event, estimated to be just over a week out.

Also Read: Markets may not see a new Bitcoin price ATH pre-halving unless $69K breaks

Bitcoin tests 200-day EMA

Bitcoin price has slipped below the support offered by a critical support level, the 200-day Exponential Moving Average (EMA) at $65,574. However, the breakdown is not decisive as the pioneer cryptocurrency continues to hold above one of two trendlines that have been pivotal in BTC action for over six months.

Analysts are watching this level with concern that if it gives in, it could lead to more losses. This was seen during the second half of January, giving way to as much as 10% in downside momentum. The expectation is that if it holds, it could precipitate a rebound.

With inflows from BTC ETFs back above water, the assumption is that the downside potential seen in the Bitcoin price is attributed to smart money looking to catch retail off guard. Other theories suggest that the dump in the BTC market comes as cat-themed tokens are peaking.

Meanwhile, Federal Reserve chair Jerome Powell has urged markets not to expect interest rate cuts until there is more confidence on inflation.

Powell also noted that reducing rates too soon could result in a reversal of the progress seen on inflation so far:

Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy. If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year.

In the immediate aftermath, Bitcoin price surged by 1% on concerns about inflation and, therefore, currency devaluation.

Bitcoin price prediction as 200-EMA remains critical

Bitcoin price action continues to maintain higher lows, while the Relative Strength Index (RSI) is showing lower lows. This is a typical hidden divergence, which could see BTC price drop before its potential leg up.

The position of the RSI below 50 is concerning, accentuated by the dwindling volumes of the Awesome Oscillator (AO). If Bitcoin price downtrend continues, a decisive slip below the 200-EMA, confirmed by BTC price moving below the upper trendline, would encourage more sell orders.

The ensuing selling pressure could see Bitcoin price test the $60,800 support, below which $60,000 would be imminent.

BTC/USDT 1-day chart

On the other hand, if the 200-EMA holds, it could provide the jumping-off point for Bitcoin price, sending it above the $69,000 threshold. If BTC bulls are able to hold above this level, it could initiate a continuation of the uptrend for BTC to reclaim the $73,777 peak before setting a new all-time high.