As stock markets crash due to the “Corona-crisis” and “Crash-Analysts” paint pictures of a possible financial depression we are about to witness, Bitcoin had a correction in price, too.
In this article we are going to take a closer look in how the 21 ma affects the price of bitcoin.
Also I am going to explain, what might happen, if we break the 21 ma (not as bearish as you think).
Bitcoin breaking the 21 ma to the upside in March 2019 led to am massive increase in price. The price of bitcoin went from 4000$ to 13.700$ in less than three months.
In the last bull-run (2016-2018) the combination of price and 21 ma looked very similar.
Bitcoin broke the 21 ma in June 2015 and crashed below it just two months later. Another two months later, bitcoin was able to break back above it again. By testing the 21 ma several times in the coming two years, this moving average became a valid indicator of Bitcoin being in a bull- or bear-market.
After the bear-market of 2018 the price of bitcoin broke the 21 ma in March 2019 and broke below it half a year later. Barely four months later, we jet again broke above the 21 moving average.
As you can see, it takes more time for the price action to evolve like the one we saw in the last bull-run, but the pattern is the same.
So, what?
So, what if we confirm the 21 ma as support?
Being supported by the 21 ma would confirm the importance of this moving average and would probably lead to further bullish price action.
Bullrun confirmed?
In my last article, I described the significance of the resistance line you can see in the chart above.
If bitcoin is being supported by the 21ma, the retest of the upper resistance line seems inevitable.
Breaking this line, which held the price down for about two years, would be very bullish and would lead to massive price movements.
What if?
What if we break the 21 weekly moving average? Could this event mean, that we are back in a bear market?
To be honest, I kind of expect bitcoin to break the 21 weekly ma to the downside, because that kind of price action would be typical for bitcoin.
Crypto-Youtubers are going to freak out about the fact that this key moving average was broken and this would lead some people with shaky hands to sell their bitcoin.
In this “wildcard-scenario”, Bitcoin will possibly break the 21ma and retest the support-line at around 7200$. If we find support on this long-term support, we have high chances of a fast price recovery above the 21 weekly ma.
Conclusion
The 21 weekly moving average providing support for the price of bitcoin would be a repetition of the price action we saw in the last bull market and indicates a steady grow in price towards the halfing.
Breaking the 21 weekly to the downside doesn’t mean the end for Bitcoin, because we have strong support at about 7200$.
Don’t get shaken out by people spreading FUD, it’s just bitcoin playing games 😉
This is not financial advice.
Make sure to always do your own research.
