Glassnode has pointed out a bizarre consistency between the current and previous Bitcoin cycles in terms of a metric, here’s what.
Bitcoin Breaks Above 200-Day Simple Moving Average Line
A “simple moving average” (SMA) is an analytical tool that produces an average of any given quantity over a specific period of time. As its name already implies, it moves along with the quantity and changes its value accordingly.
SMAs can be quite useful for studying long-term trends, as they smooth out the curve and filter out any short-term fluctuations in the relevant quantity that have no bearing on the longer trends anyways. As is usually the case with tools like these, an SMA can be taken for any length of time, but a few periods like 7 days and 30 days generally find the most use.
According to data from the on-chain analytics firm Glassnode, BTC has spent 381 days under its 200-day SMA curve in this cycle. The 200-day SMA is an important line for BTC as both the bear-to-bull and vice versa transitions have historically taken place with breaks above or below this level.
Here is a chart that shows the trend in the 200-day SMA for Bitcoin over the last few years:
The value of the crypto seems to have broken above the 200-day SMA in recent days | Source: Glassnode on Twitter
As displayed in the above graph, the Bitcoin price had dipped below the 200-day SMA around the start of the bear market and had stayed there until very recently. In total, the crypto had spent 381 days below this level, before the latest rally came along and helped the coin finally escape above this line.
In the chart, Glassnode has also highlighted the trend for the metric during the previous bear market. It looks like in that cycle as well, the crypto’s price had declined below the 200-day SMA as the bear began to take hold. Also, the eventual break above the level leads to the end of the bear market for the coin back then.
However, the most interesting of all is the duration that Bitcoin stayed below this level in that cycle: 386 days. Amazingly, this is very nearly the same number of days (381) that BTC took to break above the line in the current cycle.
If this bizarre consistency is anything to go by, then the latest push above the 200-day SMA could mean the current bear market might be done as well.
The chart also shows data for an indicator called the “Mayer Multiple” (MM) which gauges the current distance between the price of Bitcoin and the 200-day SMA. Its value is simply calculated by dividing the value of the crypto by the 200-day SMA. Bottoms in the crypto have usually taken place below the 0.8 MM level, which BTC is now firmly above.
At the time of writing, Bitcoin is trading around $20,800, up 21% in the last week.
BTC consolidates just below $21,000 | Source: BTCUSD On TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, Glassnode.com