The Bitcoin 20 DMA seems to have just crossed with the 50 DMA, so it could be bullish for the cryptocurrency.
The Bitcoin Bullish Crossover
As a technical analyst from BTC pointed out on Twitter, two key cryptocurrency indicators have just crossed over.
The two metrics are the 20-day moving average (DMA) and the 50 DMA. Before looking at the data, it is best to first familiarize yourself with these two indicators.
Moving averages (MA) help smooth out the price data for Bitcoin as they take averages of the price over a period of time and constantly update or “advance”.
The indicator “smooths” the price as it mitigates the effects of small fluctuations on the price and gives a smoother curve.
The 20-day moving average (DMA) averages the daily price over 20 days, while the 50-DMA uses data from the last 50 days.
Related reading | On-chain data shows that Bitcoin’s daily transaction volume has increased 94%, the rally may not be over yet
Now here is the diagram showing the variations of the 20 DMA and 50 DMA for BTC:
The BTC 20 and 50 DMA have their first crossover since May
As the graph above shows, the Bitcoin 20 and 50 DMA indicators are currently in a crossover where the 20 DMA curve seems to shoot above the 50 DMA.
The last time this type of crossover happened was in October 2020, just before the massive bull run that saw BTC hit a new all-time high (ATH).
These two transitions aren’t the only ones in the graph, however. There is another, different type of crossover where the 50 DMA line flies over the 20 DMA curve. This happened in May, at the top of the rally.
These observations suggest that if the 50 DMA overtakes the 20 DMA, a bullish trend could follow. But if the opposite happens, there could be a bull run.
At the time of writing, the price of BTC is hovering around $ 39,3,000, up 1% over the past 7 days. In the past month, the value of crypto has risen 16%.
Below is a graph showing the evolution of the Bitcoin price over the past 6 months:
BTC's price seems to be going back up after a dip
After enjoying a few weeks of uptrend after a period of low volatility, BTC appeared to be falling again. Today, however, the coin has turned for the better as the coin appears to be rising back up quickly.
Related reading | Trendline touch could bring Bitcoin to tears
It’s hard to say how far crypto will go this time around as the $ 40,000 resistance will prove challenging again. BTC could get stuck in an area-bound market below $ 40,000 and slowly lose volatility again. However, if the DMA crossover is something, a bull market could be imminent.
Featured image from Pexels.com, charts from TradingView.com