Here’s When to Buy Bitcoin on the Latest Dip

Bitcoin prices have done well over the last few months but have slumped in recent trading. Here's why that's a potential opportunity.
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Over the past few months, bitcoin prices have been trading incredibly well. However, the cryptocurrency has been under pressure lately.

The recent dip sent bitcoin down toward $50,000 and a key moving average.

Bitcoin rallied on March 24 on news that Tesla  (TSLA) - Get Report would begin accepting the cryptocurrency as payment. However, it was hammered from the highs as the 10-day and 21-day moving averages rejected it.

The move comes at a time where there has been great debate over bitcoin’s role and its future direction. One report called it dirty, slow and impractical. Another said bitcoin could hit $100,000.

On the flip side, cryptocurrencies have driven strong growth for companies like PayPal  (PYPL) - Get Report and Square  (SQ) - Get Report, while others like Coinbase are aiming to go public now.

At any rate, where can bitcoin go from here?

Trading Bitcoin

Daily chart of Bitcoin.

Daily chart of Bitcoin.

On Thursday before the market opened, those watching bitcoin noticed it tagged the key 50-day moving average.

Bitcoin held firm on Thursday, giving investors a modest bounce, but weren’t able to turn higher on the day. That’s OK, as long as support held, which it did.

Now we’re getting a rotation up through Thursday’s high as bitcoin pushes through $53,116.

The action is solid, but we need to see more follow-through. Specifically, bulls are looking forbitcoin to push back up through its 10-day and 21-day moving averages - the two measures that were resistance a few days ago on that Tesla rally.

If it can do that, $58,000 is on deck, followed by $60,000 and the all-time highs. If bitcoin goes on to make new highs on this move, a rally to the $67,600 area is possible.

That level marks the 161.8% extension from the February pullback.

If bitcoin can’t garner much momentum from here - for instance, say it fails to reclaim its short-term moving averages - then we need to consider the downside, too.

Should the cryptocurrency lose the 50-day moving average as support, look for the 10-week moving average to attract buyers near $48,500.

A close below this mark could put $45,000 and the 100-day moving average in play. For now, investors can stay bullish while the 50-day moving average remains support.