By Samuel Indyk
Investing.com – The price of Bitcoin was hovering around the $40,000 level on Wednesday after failing to extend above $41,000 during Tuesday’s trading session.
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The world’s largest cryptocurrency had a promising start to the week following an intervention by Tesla (NASDAQ:TSLA) CEO Elon Musk, who said that the electric vehicle company would resume accepting Bitcoin once there is confirmation of reasonable clean energy usage by miners.
Bitcoin received further upside impetus after billionaire fund manager Paul Tudor Jones said he likes Bitcoin as a portfolio diversifier.
After the great start to the week, Bitcoin has traded in a relatively narrow range over the last two trading days and appears to be magnetised to the $40,000 level.
On Tuesday, the price briefly traded above $41,000 but some key technical resistance is in play if Bitcoin pushes higher. The next key level to look out for would be the 200 Day Moving Average (DMA) which sits around $42,700 and a break above that would bring the 50DMA into play at around $44,000.
However, what will concern some traders is that those two levels are continuing to converge and the formation of a ‘Death Cross’ – when the 50DMA moves below the 200DMA – is on the horizon. Historically, a ‘Death Cross’ represents a sell signal amid a breakdown of momentum to the upside.
Fed rate decision
The next potential catalyst for a move could be today’s Federal Reserve interest rate decision.
“Heading into the FOMC, Bitcoin could see limited downward pressure if a less dovish Fed sends the dollar bouncing back.,” OANDA Senior Market Analyst Edward Moya said in an emailed note. “Post any Fed driven weakness, Bitcoin should find the $42,500 as the next key resistance level.”
At 11:53BST, the price of Bitcoin was trading around $39,760.
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