The historical trend of Bitcoin’s 200-day MAs and 600-day MAs could suggest that Bitcoin may experience another major drop in near future.
The current Bitcoin pattern has historically led to a big drop in the price
An analyst pointed out in a CryptoQuant posting that the Bitcoin price is currently between the 200-day MA and 600-day MA curves.
A “moving average” (or MA in short) is an analytical tool that averages the price of Bitcoin over any desired range. This average is constantly updated as new prices are discovered and days pass.
An MA’s main feature is its ability to even out price fluctuations and display the trend as smoother. This makes the tool quite useful for studying long-term trends, where day-to-day price changes aren’t as important.
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A MA can be used for any period. An MA can be applied for any period, including a week or a hundred days. This chart displays the change in Bitcoin MAs (200-day, 600-day) over many years.
Source: CryptoQuant| Source: CryptoQuant
The graph above shows that there has been a consistent trend in these MAs with the Bitcoin price since the previous highs.
It appears that the prices were squeezed between 200-day MAs and 600-day MAs during the period 2014-2018, after each ATH was formed and the price dwindled.
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The MAs crossed each other after spending some time in the area and Bitcoin saw a significant drop in price. The Bitcoin volume saw a decline as well.
It looks as though a similar pattern may be developing this time. The price has dropped down since the November ATH, and it’s now stuck between the two MAs.
Bitcoin’s value could drop again if this pattern is maintained and the moving Averages are not crossed over.
BTC Price
At the time of writing, Bitcoin’s price floats around $40.4k, up 1% in the last seven days. The crypto’s value has fallen 1% over the last month.
Below is a chart showing the change in coin price over the past five days.
BTC price appears to have fallen in the past 24 hours | Source: BTCUSD on TradingView
Bitcoin’s upward momentum was strong a few days ago as it looked like it would be approaching the $43k mark. The price dropped in the past 24 hours, however, just before this revisit.
Unsplash.com's featured image. Charts by TradingView.com. CryptoQuant.com chart.