Bitcoin (BTC) lost a key bear market trendline last week as it shed almost 12%, but other chart data offers a silver lining for bulls.
As noted by popular Twitter user Dave the wave on Aug. 24, long-term moving averages (MAs) are about to repeat classic bullish behavior.
Analyst: Bulls could be about to "do well"
BTC/USD disappointed over the weekend as it put in lows not seen since the end of July. Since then, $21,000 has offered only weak support, and fears abound that new lows are coming.
One of the casualties of the downturn was the 200-week MA, data from Cointelegraph Markets Pro and TradingView shows, a level which had flipped from resistance to support the month prior.
Now back overhead and unchallenged by rebounds this week, the 200-week MA offers a verdict on the current lack of strength in Bitcoin.
“The amount of FOMO we saw on CT in the past 2 weeks during the $25k rally is unprecedented. This bulltrap almost has to play out,” analyst Venturefounder summarized after the 200-week MA failed as support.
Observing the behavior of the 50-week and 100-week MAs, however, suggests that all might not be lost.
In his Twitter thread, Dave the wave showed that the former is about to cross over the latter — and in the past, this has been followed by sustained price growth.
“Bitcoin 1 year moving average now crossing the 2 year moving average as per the corrective phase after a speculative run-up,” he wrote in accompanying comments.
Looking good from a technical perspective…. no matter the sentiment. Those buying these levels have previously done well.
BTC/USD annotated chart. Source: Dave the wave/ Twitter
He added that five months prior, the same pair of MAs had correctly assessed the incoming market downtrend which saw BTC/USD hit a macro bottom of $17,600 in June.
BTC/USD 1-week candle chart (Bitstamp) with 50, 100, 200-week MA. Source: TradingView
Following on from Pi Cycle bottom
As Cointelegraph reported, there is more than one moving average-based chart mechanism flashing a bottom signal this summer.
The classic Pi Cycle Top indicator, which has caught macro bottoms throughout Bitcoin’s history, was already turning green in July, lending weight to the idea that June’s $17,600 really was a multi-year floor.
In an update on Pi this week, however, commentator Miles Johal acknowledged that bulls needed to clear higher levels to keep the status quo favorable.