The past few days have been positive for Bitcoin, as the flagship cryptocurrency continues to recover from the major correction last month. There is no shortage of analysis supporting further price gains, yet one critical piece of data stands out as very positive.
BITCOIN POISED TO CROSS A MAJOR THRESHOLD
Analysts Pierre has observed that Bitcoin is on the verge of crossing the 4-hour 200 day moving average. This price action may sound overly technical, yet it is a crucial link in better understanding Bitcoin’s market strength. Pierre has tweeted:
Bitcoin last moved above the 4- hour 200 moving average on January 5th, after which its value jumped 27%. In fact, it was during this period that Bitcoin broke USD $10k for the first time in months. Thus, crossing this line is yet another indicator that investors are feeling comfortable about the price moving forward.
The same phenomenon has happened in years past. For example, Bitcoin’s notable increase that began last April was also preceded by crossing the 4-hour 200MA. Also, there are many incarnations of the moving average, all of which have a solid track record of predicting price gains.
THE PRICE IS MOVING UP, BUT CAN IT HOLD?
Yesterday, Bitcoin broke $7k for the first time since the March crash, yet quickly corrected as profit taking moved in. Now that the price is inching back up, crypto advocates appear optimistic moving into the weekend.
It is worth noting that whereas another major correction appears unlikely, price volatility remains all but certain. The crypto market may be recovering, yet the global economy continues to shrink. Most experts now predict a recession has begun that could last months, if not years. How such a scenario could impact the blockchain space is uncertain.
Unemployment numbers are the most troubling, as workers need disposable income in order to purchase Bitcoin. For now the sell off for quick cash seems to have abated, yet it could happen again should the work stoppages and furloughs continue.
The good news is that a series of factors are coming together that all indicate a healthy market recovery. Much has been made of Bitcoin’s impending block halving, which is expected to cause a price surge. Also, the devaluation of fiat currencies by central banks should draw investors to crypto as well. In fact, all other issues notwithstanding, this time of year tends to see prices move up.
Are you excited about Bitcoin crossing above the 4-hour 200MA line? Add your thoughts in the comments below!
Images via Shutterstock, @pierre_crypt0
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