In the past, buying opportunities have been fantastic when the price of bitcoin falls below the 200-week moving average. The 20W MA has now, however, dipped below the 200W MA for the first time ever. Despite the correlation, according to PlanB, Bitcoin is still beating the S&P 500.
For the first time in Bitcoin history, this signal is visible (BTC). 20-week moving average (20W MA) just deviated below 200-week moving average (200W MA). The correlation between the BTC price and the traditional stock market (SPX), despite the fact that the BTC price has never seen such a scenario, may provide us with some useful information.
This post by BeInCrypto examines the first-ever signal that is currently appearing on the weekly chart for Bitcoin. The 20W MA and the 200W MA have made an unconfirmed death cross. This event typically serves as confirmation of a protracted bear market in traditional markets. However, the association with the S&P 500 (SPX) may enable us to interpret this signal more positively.
In light of this, it was previously believed that the 200W MA level was a reliable predictor of the BTC bottom and offered a fantastic buying opportunity. The increases after previously affecting this region were impressive:
2015: an increase of 83133% from the last bounce at $230;
2019: an increase of 313% from the last bounce at $3351.
2020 COVID crash: 1047% higher than the $5620 bounce.
The renowned "rainbow chart" for Bitcoin supports the theory that prices have reached an absolute bottom close to the 200W MA. The sections of logarithmic regression that are optimal for buying, holding, or selling are indicated, and they are color-coded using the rainbow spectrum.
Association between the 200W MA and the S&P 500
Cryptocurrency expert @el crypto prof tweeted a Bitcoin chart along with a note on the 200W MA's death cross. The 20W MA does, however, cross the 200W MA for the second time ever on his chart. This is due to the fact that he created moving averages for the difference in price between Bitcoin and the S&P 500 index.
Of course, given the far higher market capitalization of Bitcoin and the cryptocurrency industry as a whole, such a disparity in order of magnitude now is not to be expected. But it turns out that BTC is still a better long-term investment than SPX, and the 200W MA area is a great spot to start.
