- Bitcoin has flipped the 50-day moving average for the first time since July last year
- This level is a key indicator of market strength
- Various signs are now pointing towards a rally
A reversal in Bitcoin’s price is underway, with a major technical indicator showing that the next cycle is almost certainly underway. The 50-day Moving Average is a commonly used indicator to show the state of the market in the medium term, and Bitcoin has flipped this level from resistance to support for the first time since the huge moves of 2020 and 2021. This, together with other fundamental factors, suggests that Bitcoin is preparing for the next part of a longer cycle.
50-day Moving Average Holds the Key
As we can see from the chart below, the 50-day MA has bottomed out and is beginning to curve back upwards again, suggesting that the medium term trend has changed for the better:
A closer look shows us that not only is the 50-day MA curving back upwards, Bitcoin’s price is on the verge of turning it into support having consistently failed to do so despite many attempts this year:
History shows us just how important both these factor are – the last such scenario occurred in October 2021 and precipitated a run from $47,000 to $69,000 in just over a month; the time before, in July that year, saw Bitcoin rally from $36,000 to $53,000 in a similar time period; and the prior occasion occurred in October 2020 when Bitcoin ran from $11,000 to $65,000.
On each of these occasions, the 50-day MA was crucial to dictating the start, continuation, and termination of the cycle in question. The 2020-21 bull cycle highlights its importance:
As we can clearly see, price frequently tested the 50-day MA on the way up, with every bounce leading to more upside. However, the moment the curve flattened out and price struggled to remain above it, it was a sign that the cycle was over.
Bitcoin Bouncing off Various Timeframes
If we needed ammunition for the bull cannon, we can look to a weekly trendline dating back to the time when the 50-day MA was broken in 2020:
Bitcoin is not just holding support on multiple timeframes, it is also flipping crucial levels of resistance into support, which, technically speaking, is a great sign.
Throw in the fact that the dreaded FOMC interest rate rise last week was only 0.25%, the fact that alts are enjoying double and sometimes triple digit gains at the moment (while flipping their own resistance levels) and you see that all the ingredients are there for a fiery next few months.