W Power 2024

Potential bullish trend as Bitcoin's 200-day average nears a much anticipated high

The 200-day average metric holds importance as it provides insights into the long-term performance and stability of Bitcoin

Shashank Bhardwaj
Published: Apr 25, 2024 04:47:48 PM IST
Updated: Apr 25, 2024 04:51:08 PM IST

Image: ShutterstockImage: Shutterstock

The Bitcoin price surged above the 200-day simple moving average (SMA) in October, hitting a record high of over $73,000 in March. When the price remains above the 200-day SMA, it suggests a positive outlook and a strong bullish trend.

Currently, the 200-day average, a key indicator of long-term trends, is increasing rapidly, signalling strong bullish momentum and is on track to surpass its previous peak of $49,452 in February 2022. As of now, the Bitcoin price is at $64,159, marking a 4.85 percent increase over the past week, while the 200-day average stands at $47,909.

This development is significant for traders as historical data suggests that the most vigorous phase of a bullish cycle typically follows when the average exceeds its previous peak, leading to new all-time highs.

For example, in early November 2020, six months after the third Bitcoin halving, Bitcoin's 200-day SMA reached its then-highest point above $10,320. By mid-April 2021, Bitcoin had surged to $63,800, demonstrating the potential for substantial growth and positive market momentum.

In December 2016, five months after the second Bitcoin halving, the 200-day moving average reached a new record. After that, Bitcoin experienced a substantial increase of over 2,000 percent within 12 months, peaking close to $20,000. Similarly, a swift uptrend occurred in November 2012, around the time of the first Bitcoin halving, following the 200-day moving average's new high.

Bitcoin ETFs are anticipated to bolster the growing interest in BTC investments. Following Bitcoin's fourth halving on April 20, which reduced miner rewards from 6.25 BTC to 3.125 BTC, historical data reveals its notable influence on token supply dynamics, market sentiment, and adoption. Now, alongside these factors, bullish views on Bitcoin's price are further fueled by the heightened interest in BTC ETF products.

Notably, after a halving, Bitcoin price action tends to be relatively stable in the short term. However, miners might need to sell some of their existing BTC inventory to compensate for the reduced daily revenue, leading to increased selling pressure in the days or weeks following the Bitcoin halving event. This dynamic contribution can lead to a more balanced market in the aftermath of bitcoin halving.

Many analysts anticipate growing concerns about government debt will eventually compel the US Federal Reserve (Fed) to rapidly lower interest rates, maintaining an upward trend for risk assets, including cryptocurrencies.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash