The Bitcoin 20 DMA seems to have just crossed with the 50 DMA, here is how it might be bullish for the cryptocurrency.
The Bitcoin Bullish Crossover
As pointed out by a BTC technical analyst on Twitter, two important indicators of the cryptocurrency have just had a crossover.
The two metrics are the 20 daily-moving average (DMA) and the 50 DMA. Before looking at the data, it’s best to first get a grasp of both these indicators.
Moving averages (MA) help smooth out the price data for Bitcoin as they take averages of the price over a specific period and constantly update or “move” forward.
The indicator “smooths out” the price as it mitigates effects of small fluctuations on the price, giving a smoother curve.
The 20 daily moving average (DMA) averages the daily price over 20 days, while the 50 DMA uses data of the past 50 days.
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Now, here is the chart that shows the variations in the 20 DMA and 50 DMA for BTC:
The BTC 20 and 50 DMA have their first crossover since May
As the above graph displays, the Bitcoin 20 and 50 DMA indicators are having a crossover right now where the 20 DMA curve seems to be shooting above the 50 DMA.
The last time this type of crossover happened was in October 2020, right before the massive bull run where BTC set a new all-time-high (ATH).
However, these two crossovers aren’t the only ones on the graph. There is another, different type of crossover where the 50 DMA line flies above the 20 DMA curve. This one occurred in May, right at the top of the rally.
From these observations, it looks like when the 50 DMA overtakes the 20 DMA, a bullish trend might ensue. But if the reverse happens, a bull run could be there.
At the time of writing, BTC’s price is moving around $39.3k, up 1% in the last 7 days. Over the past month, the crypto’s value has increased by 16%.
Below is a chart that shows the trend in the price of Bitcoin over the last 6 months:
BTC's price seems to be going back up after a dip
After enjoying a couple of weeks of uptrend after a period of little volatility, BTC again seemed to be going down. However, today the coin has taken a reversal for the better as the coin seems to be quickly climbing back up.
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It’s hard to say how far the crypto will go this time as the $40k resistance will again prove to be a challenge. BTC could get stuck in a rangebound market below the $40k mark and slowly lose its volatility again. Though if the DMA crossover is anything to go by, a bull market might be ahead.
Featured image from Pexels.com, charts from TradingView.com