How will the current bear market play out?

After nearly two months of dropping below the 200-week moving average (the 200W MA), Bitcoin broke above this important curve again on Friday, August 5. This fact is important to Arc Analyst Yassin Yassin Almangarh, who highlights that this recovery has occurred only 7 times in the history of Bitcoin.

carpentary I remembered this in the past, Within a year of breaking the 200-week moving average, bitcoin posted a 240% return. The price has already been fluctuating since July 19 around this moving average, which at the time of writing was at $22,830, while Bitcoin is at $23,185.

As seen in the chart below, shortly after the breakout of the 200W EMA, the price bounced off the $19375 level, which was below the all-time high from December 2017.

Bitcoin dollar price trend in relation to the 200 . moving average indicator
Bitcoin price trend since 2011. Source: YassineARK / Twitter.

Another indicator highlighted by Elmandgra comes from the interaction of the bitcoin price with three curves. The first is the one that defines the market cost basis (light blue), then the investor cost basis (mustard) and the delta cost basis (pink). The latter is the market cost minus the moving average of the bitcoin price, and It is a strong support level for Bitcoin.

Bitcoin price relative to cost
Bitcoin cost rules. Source: @YassineARK / Twitter.

As shown in the chart, in December 2018, the bitcoin price touched the delta cost curve, but in April 2020, the price at its lowest point only touched the investor cost curve. In the current bearish cycle, we see that the price fell below market and investor cost, before rebounding. However, at its minimum value, the price remained well above the cost of Delta, Which is currently $13,980.

This graph allows us to estimate the difference between the 2017-2018 bearish seasons and the March 2020 season. Only 2017-2018 was the most stretched, and the price reached the lower delta cost curve. In 2020, the correction affected only the cost of the investor and had the shortest duration.

The current market is still in the making

The current correction represents a 70% drop in the bitcoin price. Although it does not reach the 80% retracement reached in the downward cycle of 2018, it represents a proportionately larger deterioration in prices, as this year’s bottom line was briefly below the investor’s price.

Without making sure that the price of Bitcoin has reached its lowest levels, This bear season can be considered between the correction of 2018 and the one that occurred in 2020. At the moment, bullish traders continue to hold bitcoin above the 200-week moving average, and are betting that increased demand may favor a break above $24,000.

 

 

 

 

 

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