Glassnode has pointed out a strange consistency between the current and previous Bitcoin cycles in terms of a metric, here’s what happens.
Bitcoin breaks above the 200-day simple moving average line
A “simple moving average” (SMA) is an analytical tool that produces an average of any given quantity over a specified period of time. As its name already indicates, it moves along with the quantity and changes its value accordingly.
SMAs can be quite useful for studying long-term trends, as they smooth the curve and filter out any short-term fluctuations in the relevant amount that have no relation to longer-term trends anyway. As is often the case with tools like these, an SMA can be taken for any length of time, but periods like 7 days and 30 days are generally the most useful.
According to data from the on-chain analysis firm glass node, BTC has spent 381 days below its 200-day SMA curve this cycle. The 200-day SMA is an important line for BTC, as transitions from bear to bull and vice versa have historically occurred with breakouts above or below this level.
Here is a chart showing the trend in the 200-day SMA for Bitcoin over the past few years:
The value of the cryptocurrency appears to have broken above the 200-day SMA in recent days | Font: Glassnode on Twitter
As shown in the chart above, the Bitcoin price had dipped below the 200-day SMA at the start of the bear market and had stayed there until very recently. In total, the crypto had spent 381 days below this level, before the latest rally came along and helped the coin finally break out above this line.
On the chart, Glassnode has also highlighted the trend of the metric during the previous bear market. It appears that in that cycle as well, the price of the crypto had declined below the 200-day SMA by the time the bear began to take hold. Also, the eventual break above the level leads to the end of the bear market for the coin at that point.
However, most interesting of all is the time that Bitcoin remained below this level in that cycle: 386 days. Surprisingly, this is almost the same number of days (381) that it took for BTC to break above the line in the current cycle.
If this strange consistency is anything to go by, then the latest push above the 200-day SMA could mean that the current bear market could end as well.
The chart also shows data for an indicator called the “Mayer Multiple” (MM) that measures the current distance between the Bitcoin price and the 200-day SMA. Its value is calculated simply by dividing the value of the cryptocurrency by the 200-day SMA. Funding in the crypto has generally taken place below the 0.8MM level, which BTC is now firmly above.
At the time of writing, Bitcoin is trading around $20,800, up 21% in the last week.
BTC consolidates just below $21,000 | Source: BTCUSD on TradingView
Featured image by André François McKenzie on Unsplash.com, Charts from TradingView.com, Glassnode.com
This post Glassnode Points Out Weird Consistency in Bitcoin Cycles
was published first on https://newsbtc.com/news/bitcoin/glassnode-consistency-bitcoin-cycles/