Bitcoin’s free-fall below $50,000 has it testing a new technical threshold that could signal even more weakness ahead

Bitcoin’s free-fall below $50,000 has it testing a new technical threshold that could signal even more weakness ahead

Bitcoin's weakening momentum has helped contribute to a swift 24% decline from its record high of nearly $65,000 over the past week, and more downside could be ahead if key technical levels fail to hold as support.

The first sign of trouble for bitcoin was a consecutive daily close below its 50-day moving average on Wednesday, which technical analyst Katie Stockton of Fairlead Strategies said was a key line in the sand for the cryptocurrency.

Moving averages are a lagging trend-following indicator that technical analysts use to smooth out price movements and help identify the direction of the trend in place.

Traders often view the the 50-day moving average, which is the average daily closing price of a security over its previous 50 trading sessions, as a short-term moving average that often represents areas of support or resistance.

Now, bitcoin is struggling to hold support at its 100-day moving average, another closely watched moving average that often helps identify areas of support and resistance in the short-term. The weakness was exacerbated on Thursday following reports that the Biden administration is eyeing an increase in the capital gains tax.

The 100-day moving average currently sits at $49,500. Bitcoin briefly fell below that level on Friday to