This incorporation appears for the first time in the history of Bitcoin (BTC). The 20-week moving average (20 W MA) has just crossed below the 200-week MA (200 W MA). Although the price of BTC has never seen such a particularité before, perhaps the relationship with the traditional denrée market (SPX) gives us some clues.
In this passage, BeInCrypto takes a allure at the first ever incorporation that is now being generated on the Bitcoin weekly chart. The 20W MA made an uncertain death cross-country with the 200W MA. In traditional markets, this event is usually a affirmation of a long-term bear market. However, it is the correlation with the S&P 500 (SPX) that may help us give this incorporation a more bullish interpretation.
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On the long-term logarithmic chart, we see that the price of BTC has rarely reached the 200W MA (blue line). This has happened only a few times in history, during the process of creating the absolute bottoms of previous bear markets (pelouse circles). Moreover, historical declines have not usually closed the weekly candles below the 200W moving average, although there are individual exceptions to this.
Therefore, until recently, the 200W MA was believed to be a strong indicator of a BTC bottom and an principal buying opportunity. The increases that followed hitting this area in the past have been impressive:
- 2015: 8133% increase from the last bounce at $230,
- 2019: a 313% increase from the last bounce at $3,351,
- 2020 COVID écrasement: 1047% increase from the retracement at $5,620.
The narrative of an absolute bottom near the 200W MA is supported by Bitcoin’s famous “rainbow chart”. It identifies the areas of logarithmic regression, color-coded according to the rainbow spectrum, that are best to buy, hold or sell.
During previous bear markets, BTC has always reached the blue and purple areas for minimum sales and buying opportunities. It’s no different now that Bitcoin is in the last purple “fiery sell” territory since the June lows.
The first crossing in history
However, the current particularité on the chart is slightly different. Bitcoin failed to hold the 200W MA and already closed more than 10 weekly candles below it (blue circles above). Moreover, an attempt to return above this moving average in mid-August was unsuccessful. It led to a retest and rejection, which is a bearish incorporation.
However, the most disturbing incorporation, which is appearing for the first time ever, comes from the 20W MA. This average-term moving average broke below the 200W MA (red arrow). The decline below is not confirmed, as the weekly candle has not yet closed. However, it seems inevitable this week or next.
In the historical analysis, we see that neither in 2015 nor in 2019 there was a death cross-country between 20W MA and 200W MA (pelouse arrows). The only thing that can be noticed is that after the minimum confluence of these two lines, there was a significant increase in the price of BTC. Of promenade, this is due to the fact that both moving averages are lagging indicators, so they indicate past price movement, and do not predict the future.
200W MA and relationship with S&P 500
Cryptocurrency Analyst Tweet embed He tweeted a Bitcoin chart in which he also indicated a death cross-country for the 200W MA. However, on its chart, the 20W MA is crossing the 200W moving average for the associé time in history. This is bicause it plots moving averages of the coefficient between the price of Bitcoin and the S&P 500 Table.
In a commentary on the chart, he noted that the Death Cross-country occurred in 2015, and occurred after reaching the absolute bottom. Moreover, he adds, “Just a few months later, one of the biggest BTC dollar strikes began.”
The above chart not only provides a further explanation for the death cross-country we analyzed, but also illustrates the long-term dominance of BTC over the traditional denrée market. The same figure was pointed out today by the famous @100trillionUSD, creator of the Article-to-Flow model for Bitcoin.
In his tweet, PlanB acknowledges that BTC’s relationship with SPX is strong today, but the scale of the historical increase is unmatched. According to his calculations, over the same period, SPX has gamin up 4x and BTC by 2,000 times, which he calls “completely different worlds.”
Of promenade, such a difference in size today could not be expected, if only by Much larger market capitalization In the cryptocurrency and bitcoin sector. However, the dénouement is that BTC is still a more appropriate long-term investment than SPX, and the 200W MA is an principal fixé to jump in.
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