BTC: 20MA Importance - Why We May Be in for a Massive Bull Run

2020년 9월 24일

Hello Traders,

Today we would like to talk about one of the most important support lines for Bitcoin - the 20 Moving Average (MA). The 20MA has acted as major support in the past during the history of all the bull runs currently observed. We have had at least five different instances that took place in 2016 and 2017 where Bitcoin price collapsed back to the 20MA, and each bounce has given over 100%+ returns at a minimum, respectively. Each time Bitcoin has found strong support at the 20MA where Bitcoin has rocketed off to the next psychological resistance level each and every time. Vice versa has happened during the bear market, where it has acted as resistance.

While we believe Bitcoin may be able to retrace, these small movements within the market has shown nothing but a 'buying the dip' opportunity on a consistent basis. Now that we are currently bouncing on the 20MA for the third time over the past three weeks, we can safely assume that this spot, especially at the $10,000 psychological support level, we can assume that this may be actually the last time we will ever see anything around the sub 10K levels.

While Bitcoin has strongly recovered from the COVID-19 crash, we have also witnessed something very interesting with Bitcoin in terms of overall price action in the short term. Bitcoin has recorded the highest correlation with the stock market (more so the SNP500 (SPX)) ever since the COVID19 crash has happened. While we aren't sure for the exact reasonings, but this may be indicating that the dollar (holding cash) has become a severely important player within the market. This can indicate that a true recession is in play for the stock market; however, as Bitcoin has traditionally kept the ideal 'store of value' philosophy to many people since 2009, we have yet to see the immediate decoupling happen during the hardships of the Stock Market, most notably controlled by the COVID19 global situation. This is conjunction with our market psychology theory, where Bitcoin is now tending to move in correlation during bear markets with the SNP500, and decouples during bull markets. This is merely an observation, but from a visual perspective, we are seeing a true representation in real time with the stock market. Here is a graph from our previous analysis to show it:

In conclusion, the 20MA has always acted as support and after three profound bounces on the support, we may be in for a treat for the upcoming months. This may indicate that the real bull run has yet to come.

Trade Safe.
X Force