Will Bitcoin See Another Big Drop Soon? Historical trend can say yes


The historical trend of the 200-day and 600-day MAs may indicate that Bitcoin could see another big drop in the near future.

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

As noted by an analyst in a CryptoQuant afterThe current Bitcoin price appears to be squeezed between the 200-day and 600-day MA curves.

A “moving average” (or MA for short) is an analytical tool that averages the price of Bitcoin over any desired range. As the name suggests, this average is constantly updated as each day passes and new prices are observed.

The main advantage of an MA is that it evens out any local price fluctuations and shows the trend as a smoother curve. This makes the tool very useful for studying long-term trends, where daily price changes are not so important.

Related literature | Bitcoin LTHs Now Hold Significantly More Loss Compared to May-July 2021

An MA can be applied to any period. For example, a week, a hundred days or even just one minute. The chart below shows the trend in the 200-day and 600-day Bitcoin MAs in recent years.

BTC price seems to be in between the two moving averages at the moment | Source: CryptoQuant

As you can see in the chart above, a trend regarding these MAs and Bitcoin price has occurred after previous all-time highs.

It appears that in 2014 and 2018, after the respective ATHs formed and the price fell, the price was pushed down for a period between the 200-day and 600-day MAs.

Related literature | Why a “boring” Bitcoin could be a good thing?

After staying in the region for some time, the MAs crossed and the crypto saw a big drop in price. While this was happening, Bitcoin volume was also on a downward trend.

Now it seems that a similar pattern is starting to form this time as well. The price has fallen since the November ATH and is now stuck between the two MAs.

If the pattern holds and the moving averages cross again, then there may be another big drop in store for Bitcoin’s value.

BTC price

At the time of writing, Bitcoin’s price is hovering around $40.4k, up 1% over the past seven days. Over the past month, the crypto has fallen 1% in value.

The chart below shows the trend in the price of the coin over the past five days.

The price of BTC seems to have fallen in the past day | Source: BTCUSD on TradingView

Bitcoin showed strong upward momentum a few days ago as it appeared to be approaching a new retest of the $43k level. However, before such a visit was revisited, the price fell in the past 24 hours.

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

Leave a Reply

Your email address will not be published.