Bitcoin's Long-term Bullish Signal Suggested by PlanB Based on 200-Week Averages
** crypto analysis **
Get Ready for a Potential Bitcoin Bull Run, According to PlanB
The creator of the infamous stock-to-flow model, PlanB, hints at an upcoming Bitcoin bull run on the basis of two vital moving averages. Recently, this crypto whiz shared his insights with his massive 209,000 YouTube followers, discussing how the current proximity of these two moving averages could signal a forthcoming price surge.
Speaking in his video update, PlanB remarks that Bitcoin usually performs impressively when the two averages are close together, especially after historical setups like these have occurred in previous cycles, leading to significant market rallies.
"You can notice that if we look at those instances where the lines are close, that's at the end of 2020; that's when the bull market started. It marked the start of the FOMO phase. Same as in 2017, the lines were together. So when the arithmetic mean and geometric mean are together, it could mean the bull market is about to commence," he explains.
Moving Averages and Price Trends
PlanB's intriguing analysis centers around the 200-week arithmetic and geometric moving averages – two long-term trend indicators. They assist in smoothing out price activity across multiple years, offering guidance on overall market direction.
He goes on to explain that, historically, when the two lines come close together, it often indicates a tranquil zone just before price acceleration is expected. Conversely, major market crashes are typically triggered when the gap between the two lines expands significantly.
Let's chat about these moving averages in a bit more detail:
- Arithmetic Moving Average (MA): This commonly used metric smooths out price data over time by taking the average price of Bitcoin over a 200-week period. The 200-week MA often serves as a crucial support level during bear markets and acts as a resistance level during bull markets.
- Geometric Moving Average (GMA): Rather than calculating a simple average, the geometric moving average uses a more complex method. This involves multiplying the previous values and then taking the nth root of the product, with n representing the number of periods. This process provides a more accurate trend signal than the arithmetic moving average alone by assigning more weight to newer data while still preserving a long-term perspective.
Could History Be Repeating Itself?
As you might have guessed, the proximity of these moving averages has often appeared in crucial junctures of Bitcoin's long-term cycles. PlanB highlights, for instance, that similar setups were identifiable before rallies in 2017 and again in 2020. In both situations, the alignment occurred before periods marked by robust price momentum and investor optimism.
It's important to remember that no single indicator can guarantee future price action. However, PlanB's moving average analysis offers additional evidence for those studying Bitcoin's long-term chart structure. If history repeats itself, it's possible that Bitcoin may be gearing up for a phase with increased upside potential.
[1] https://bitcoinist.com/bitcoins-200-week-moving-average-price-prediction/
[2] https://bettermarkets.com/wp-content/uploads/2019/08/Convergence-of-bitcoin-s-50-day-moving-average-and-200-day-moving-average-is-closely-related-to-market-volatility-by-granville-turner-bitcoin-alphanewsletter-july-2016.pdf
[3] https://www.fool.com/investing/2021/02/17/bitcoin-price-prediction-for-2021--what-experts-say/
[4] https://www.forbes.com/sites/frankchoikoo/2021/04/06/this-buy-signal-indicates-bitcoins-price-will-bounce-back-by-2025/?sh=7082099f1580
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- The close proximity of Bitcoin's 200-week arithmetic and geometric moving averages, as suggested by PlanB's analysis, is likely to add credence to the idea of an upcoming Bitcoin bull run, especially since such alignments have been defined as crucial junctures in previous market cycles.
- In the world of finance and investing, technology plays a significant role, with moving averages like the arithmetic and geometric, serving as trend-defining indicators, providing insight into potential price crashes or surges in the crypto market.
- In discussion of PlanB's analysis, it's crucial to understand that while the proximity of these moving averages does not definitively predict future price action, it does add supporting evidence for those studying Bitcoin's long-term chart structure, and if history repeats itself, Bitcoin may be on the verge of a phase marked by increased upside potential.
- In contrast to the tranquil zone that often precedes a bitcoin price surge when the moving averages are close together, major market crashes are likely to be triggered when the gap between the 200-week arithmetic and geometric moving averages expands significantly, according to PlanB's analysis.
