If you’ve been waiting for a bitcoin recovery, you might have to sweat it for months. This is the conclusion of some technocrats looking for the method madly. Bitcoin’s decline since May, fueled by the economic crisis, put it below the 200-week moving average, around $22,600 (around Rs 18,05,800), as well as the 200-day moving average of $35,500 (around Rs 26). dropped down. 76,700). It has been moving relatively sideways for over a month now, hovering near the 200-week moving average.
Valkyrie Investments, for one, says its research is pointing to an upward trend — but it’s unclear when.
“Historically we have accumulated for three to six months (around the 200-week average),” said Josh Olszewicz, Valkyrie’s head of research, referring to the period of sideways trading before the price broke out.
Between the end of 2018 and the beginning of 2019, bitcoin spent almost three months breaking above the 200-week moving average.
However, in a gloomy scenario, bitcoin may not rally for nearly a year, Olszewicz said.
Moving averages smooth out wild price movements to clear the signal, or at least that’s the idea. Traders use long-dated averages to find the next support or resistance levels.
Yet chart analysis based on historical price patterns is far from an exact science, especially when it comes to the young, fast and furious history of crypto.
Some other technical indicators are indicating a wide range of potential levels of support for bitcoin, ranging from $20,000 (approximately Rs 16 lakh) to $12,000 (approximately Rs 9,58,900) – suggesting that the world The biggest cryptocurrency could be on a fresh decline.
This week, bitcoin is hovering above its 2017 peak, but is down more than 68% from its all-time high of $69,000 (about Rs 55,13,300) last November.
‘Four steps down, one up’
Some see a pattern in the recent bearish.
“The market is in a bear channel that started back in May,” said Eddie Tofpick, Head of Technical Analysis at ADM Investor Services International. “It looks like it’s in four step down and one step up mode at the moment.”
The Fibonacci retracement pattern, intended to identify support and resistance levels, suggests that bitcoin has found a moderate level of support between $19,500 (approximately Rs 15,58,200) and $20,000 (approximately Rs 16 lakh), Patrick Reed, co-founder said. FX Consultancy The Adams Principle.
Olszewicz points to $12,000 (around Rs 9,58,900) in Valkyrie, a level bitcoin hasn’t touched in nearly two years as the next support.
In the absence of fundamental drivers, technical analysis has proven useful in identifying certain long-term trading patterns for cryptocurrencies such as bitcoin.
For example, a famous “death-cross” chart pattern on December 10 foreshadowed a decline in bitcoin. In early January, the 200-day moving average proved to be a strong resistance.
Such methods also come with dangers, as proved this year when the stablecoin TeraUSD and its coupled token Luna and later the explosion of hedge fund Three Arrows Capital crashed all cryptocurrencies.
Spot trading of cryptocurrencies on major exchanges fell 27.5 per cent to $1.41 trillion (about Rs 1,12,64,600 crore) in June, the lowest level since December 2020, according to data from research firm CryptoCompare.
“Trust has come out of the market in a big way,” Reid said in the Admis theory.
© Thomson Reuters 2022