Bitcoin Has Another “Bearish” Moving Average Cross
If you’re looking for a bearish bitcoin scenario, history could be on your side. Bitcoin just had another “bearish” moving average cross: the 20-week moving average (MA) has crossed below the 50-week MA. That’s only happened four other times since 2014. On each of those occasions, the bitcoin price drifted down to the 200-week MA.
Contents
ToggleHow the bearish moving average cross works
A bearish moving average cross – aka a “death cross” – happens when a faster moving average crosses below a slower one. So in this case, bitcoin’s 20-week MA (faster) crossed below the 50-week (slower).
The 20-week MA line (gold) shows bitcoin’s average weekly closing price over the past 20 weeks. The line moves each week based on how that average changes – hence it’s a “moving” average. The 50-week MA line (blue) does the same thing, but over 50 weeks. It moves “slower” than the 20-week MA because its average spans more weeks.
What’s the opportunity for this Bitcoin moving average cross scenario?
The cross has happened four times since 2014, and each time, bitcoin eventually reached the 200-week moving average. Technically, there was another cross in 2011 – and bitcoin actually rallied much higher after that. But the 200-week MA never existed back then (because bitcoin hadn’t yet been around for 200 weeks).
Still, history suggests a “higher probability than not” that bitcoin gets to its 200-week MA this time around. That line is currently sitting just below $60,000.
But because it’s sloping upward (bitcoin generally rises on average over 200 weeks), it could be higher by the time the price reaches it. Mathematically speaking, the longer the price takes to get to the 200-week MA, the higher it will be when it does.
Of course, it doesn’t need to reach the 200-week MA. But if it reaches it, history also suggests a fantastic buying opportunity.
As usual, none of this is investment advice. To learn how to use moving averages in your investment strategy, check out our Moving Averages Explained guide.
Key takeaways
- Bitcoin has printed another bearish moving average cross, with the 20-week MA crossing below the 50-week.
- In past cycles, the price has often gravitated toward the 200-week moving average after the cross.
- The 200-week MA is currently just below $60,000, but it could be higher “if” bitcoin even gets there.
