11 months ago • 1 min
Bitcoin staged an impressive run last week, rallying over 21% from start to finish. That put the king of crypto back above the all-important $20,000 level and back above its 200-day simple moving average (SMA, white line) – the constantly updating price average that tracks its previous 200 days of trading.
This chart shows bitcoin’s relationship with the popular moving average. And while there’s always the chance of short-term volatility, there are two things here to suggest that the OG crypto could be in for a longer-term rally. First, the last time bitcoin was above the moving average was in December of 2021, when it was going for about $48,000. Since then, it’s stayed well below the line, so the push back above it now suggests renewed buying interest. Second, the slope of the moving average has flattened out, meaning the longer-term downtrend has stalled, and a fresh uptrend could now be ready to take its place. During all of bitcoin’s bull runs, the price has been above an upward sloping 200-day SMA.
With all that being said, buying bitcoin just because its price crossed this statistical line hasn’t always yielded the best results: in late 2019 and early 2020, for example, you'd have had to endure steep losses before the big run eventually got going. Still, if you’re looking to decide which way bitcoin might be headed next, the 200-day SMA is pretty good at dropping hints. And as for why bitcoin might’ve rallied last week, I wrote about three reasons here.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
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