For the third time in history, two major moving averages have made a bearish intersection on the Bitcoin (BTC) chart. Paradoxically, this could be a very bullish signal! Historically, it has led to strong rises and initiated an accumulation phase before the next bull market.
Long-term moving averages like to stay away from each other. However, from time to time they intersect, often setting turning points on an asset’s chart. On the Bitcoin chart, the 50 and 100 week moving averages (50W MA and 100W MA) perform such a function.
In today’s analysis, we will look at their historical crosses, which have provided interesting long-term signals for the price of BTC. Indeed, it turns out that a bearish crossover was the signal to bottom out in historical bear markets. A bullish crossover, on the other hand, gave rise to a new bull market.
In confluence with these two moving averages is the so-called coral trend indicator. This indicator also signals that the bottom of the current bear market has already been reached and that Bitcoin is currently going through an accumulation phase ahead of the next bull market.
50W MA intersects 100W MA
On August 5, an important technical event occurred on the BTC chart. Two major moving averages have formed a bearish crossover. The 50W MA fell below the 100W MA. This was the 3rd such situation in the entire history of BTC trading (green lines).
Previously, this signal appeared twice: on April 20, 2015 and on February 18, 2019. In both cases, the intersection occurred a dozen weeks after Bitcoin reached the absolute low of the bear market. It’s the same this time:
- 2015: 14 weeks / 98 days from low at $164
- 2019: 10 weeks / 70 days from low at $3,148
- 2022: 12 weeks / 84 days from low at $17,607
Thus, it turns out that the intersection that took place on September 5 is perfectly in the middle of the time range set by the two previous historical signals. Of course, two historical signals are far too few to be statistically valid. However, one can certainly speak of some similarities.
Bitcoin at $41,100 on August 14, 2023
Looking further back at this signal, one can trace what happened next. The next major event was a bullish crossover when the 50W MA moved back above the 100W MA. This has happened twice so far: May 16, 2016 and December 9, 2019 (red lines).
After the week in which the bearish crossover occurred, the price of BTC went through a phase of accumulation and increase. From 2015 to 2016, it jumped 111% during this period, while in 2019 it increased by 104%. Meanwhile, the time separating the two signals was 56 and 42 weeks, respectively.
Now, if we want to extrapolate this rare data to the current chart, we can try to calculate the price of BTC and when it will reach the next bullish crossover. Averaging historical data upwards, we get 107.5%, and in time we get 49 weeks.
This gives us a very rough prediction of the BTC price at $41,100, which would be reached on August 14, 2023. Additionally, a bullish cross between the 50W MA and the 100W MA in the long term led to increases.
However, it should be noted that in March 2020, due to the COVID-19 crash, the price of BTC fell below the values recorded during the previous signal. In contrast, in 2016, the signal started a 1.5 year bull market and the price of BTC did not fall below the signal price.
Confluence with the coral trend indicator
Further confirmation of the conclusions of the above analysis is provided by the so-called coral trend indicator. His update was posted yesterday on Twitter by a cryptocurrency analyst @el_crypto_prof.
The indicator is a simple curve on the Bitcoin monthly chart, which has two possible colors. Green corresponds to a curve with an upward slope, while red corresponds to a downward slope. It is therefore a typical lagging indicator, similar to the moving averages analyzed previously.
The analyst points out that the first red dot on the Coral Trend Indicator chart appeared about 60 days after reaching the absolute low of the bear market (blue arrows). This happened both in 2015 and at the turn of 2018-2019.
Currently, the indicator also delivered its first red dot in early August, also after around 60 days since the June lows at $17,607. Although historically the indicator has continued to generate a few more red dots, Bitcoin has already bounced north, preparing for the next bull market.
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