(Reuters) – If you are waiting for bitcoin to go up again, you might have to wait for months. Some technical experts who tried to make sense of the chaos came to this conclusion.
Since May, economic worries have caused Bitcoin’s price to drop, putting it below its 200-week moving average of about $22,600 and its 200-day moving average of about $35,500.
It hasn’t changed much in more than a month, and it’s still close to the 200-week moving average.
One company, Valkyrie Investments, says its research points to a move up, but it’s not clear when.
Josh Olszewicz, head of research at Valkyrie, said, “Historically, we’ve accumulated (around the 200-week average) for three to six months before a price break upwards.”
Bitcoin spent almost three months between the 200-week moving average in late 2018 and early 2019.
Olszewicz also said that if things get worse, bitcoin may not go up for about a year.
The idea is that moving averages smooth out wild price changes to clean up the signal. Traders use averages from a longer time period to find the next level of support or resistance.
But chart analysis based on past price patterns is not a perfect science, especially when it comes to the short, fast, and wild history of cryptocurrencies.
Some other technical indicators show that bitcoin could be supported at a wide range of levels, from $20,000 to $12,000. This suggests that the world’s biggest cryptocurrency could drop again.
This week, the price of bitcoin is just above its 2017 high, but it is still over 68% below its all-time high of $69,000, which was reached last November.
‘FOUR STEPS DOWN, ONE UP’
Some people can see a pattern in the recent drop.
Eddie Tofpik, head of technical analysis at ADM Investor Services International, said, “The market has been in a bear channel since May.” “It looks like it’s taking four steps back and one step forward right now.”
Patrick Reid, co-founder of the Adamis Principle, an FX consulting firm, said that Fibonacci retracement patterns, which try to find support and resistance levels, show that bitcoin has found a moderate level of support between $19,500 and $20,000.
According to Olszewicz at Valkyrie, the next support is at $12,000.This is a level that Bitcoin hasn’t been at in almost two years.
Technical analysis has helped find long-term trading patterns for cryptocurrencies like Bitcoin when there are no fundamental drivers.
For example, on December 10, a well-known “death-cross” chart pattern showed that bitcoin prices were about to drop. At the beginning of January, the 200-day moving average was a strong barrier.
Such methods are also risky, as was shown this year when the stablecoin TerraUSD, its matching token Luna, and the hedge fund Three Arrows Capital all went down. This caused all cryptocurrencies to crash.
Spot cryptocurrency trading on major exchanges fell 27.5 percent in June to $1.41 trillion. This is the lowest level since December 2020, when it was also $1.41 trillion.
Reid at Adamis Principle said, “Trust has left the market in a big way.”
