Is Bitcoin Gonna See Another Big Drop Soon? Historical Trend May Say Yes


The historical trend of the 200- and 600-day moving averages may indicate that Bitcoin could see another significant decline in the near future.

The current Bitcoin pattern has historically led to a significant price drop

As pointed out by an analyst at CryptoQuant mailThe current bitcoin price appears to be compressed between the 200-day and 600-day moving average curves.

a “moving average“(or MA for short) is an analytical tool that measures the average price of Bitcoin over any desired range. As its name suggests, this average is constantly updating itself with each passing day and new prices are observed.

The main benefit of a moving average is that it smoothes out any local price fluctuations, and displays the trend as a smoother curve. This makes the tool very useful for studying long-term trends, where daily price changes are not significant.

Related reading | Bitcoin LTHs Hold Much More Loss Now Compared To May-July 2021

A moving average can be applied to any time period. For example, a week, a hundred days, or even just one minute. The chart below shows the trend in bitcoin’s 200-day and 600-day moving averages over the past several years.

Bitcoin 200 day and 600 day moving averages

BTC price seems to be stuffed between the two moving averages right now | Source: CryptoQuant

As you can see in the above chart, a trend associated with these moving averages and the bitcoin price occurred after the previous all-time highs.

It appears that during 2014 and 2018, after the formation of the relevant ATHs and the price pullback, the price fell for a period between the 200-day and 600-day moving averages.

Related reading | Why ‘boring’ bitcoin can be a good thing

After staying in the zone for some time, the moving averages crossed over each other and the cryptocurrency noticed a significant drop in its price. Also, while this was happening, bitcoin volume also experienced a downtrend.

Now, it looks like a similar pattern is starting to form this time as well. The price has gone down since NOVEMBER ATand is now stuck between the two moving averages.

If the pattern continues and the moving averages cross again, there could be another big drop in the value of Bitcoin.

Bitcoin price

At the time of writing this report, Bitcoin price It is floating around $40.4K, up 1% in the past seven days. Over the past month, the cryptocurrency has lost 1% of its value.

The chart below shows the currency price trend over the past five days.

Bitcoin price chart

BTC's price seems to have seen a plummet over the past day | Source: BTCUSD on TradingView

Bitcoin showed some strong upward momentum two days ago as it appeared to be approaching another retest of the $43,000 level. However, before any such visit, the price has gone down in the last 24 hours.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com



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