Bitcoin's price history

MA20: When the Bitcoin bulls are again determining the price

Not a day goes by without an expert making forecasts about the Bitcoin price. But is there a possibility of predicting a bull market? A moving average can give hints.

“Permabull xyz sees Bitcoin at the end of 2018 with so many US dollars”. “Investor says: Bull market comes in October”. “When the employees of Kreissparkasse Bottrop are paid their bonuses, a huge institutional investment can be expected”. The list of opinions about the Bitcoin course can only be completed with difficulty. Hardly a day goes by without an investor, financial expert, Permabull or Permabear commenting on the subject.

Justified assessments are something different. Even if you don’t know what the future holds, there are more often signs. History does not repeat itself, but sometimes rhymes, as the old saying goes. Such “rhyming” is what we would like to look at in Bitcoin’s price history. It is the behaviour of the Bitcoin price around the MA20 in the weekly chart.

What is this Bitcoin formula?

Before we look at the MA20 in the weekly chart, we briefly clarify both terms: The weekly chart is the illustration of a price trend in which the closing prices of each week are always shown. One year then has 52 such data points – one for each week. The weekly chart for the Bitcoin formula price since the end of 2017 looks as follows:

The MA20 is a so called moving average. Price developments, especially for crypto currencies, can sometimes be quite noisy. This price development can be smoothed out by averaging the last twenty values for each time value.

For a trader, however, such mean values are interesting because of something else: Such moving mean values can represent an important support or an important resistance, i.e. describe price levels that are difficult to undercut or exceed. A picture says more than a thousand words, corresponding here to the MA20 in the weekly chart of the Bitcoin price:

The MA20 as assessment of the Bitcoin trader

Here we see the development of the Bitcoin trader share price from 2012 to 2018. The MA20 is pale blue. Arrows mark special moments when the price rose above the MA20 (green), fell below it (red) or only touched the moving average (blue). As you can see from the chart, the MA20 is a good support if the price is above it, while it is a stable resistance if the Bitcoin trader prices are bad.

One sees this particularly well in the price development since end of 2015, speak since the last green arrow. After the Bitcoin price rose above the MA20 at the beginning of October 2015, it could remain above this level until January 29, 2018 (marked with a red arrow). Five times the Bitcoin price tried to fall below the MA20, but could rise again and again. The opposite behavior can be seen since January 2018, when the Bitcoin price fell below the MA20. All three breakout attempts via the MA20 have so far been unsuccessful.

By no means all these opinions are worth nothing. In February Tom Lee of Fundstrat explained his bullish position in an interesting lecture. There are price forecasts which are based on a solid fundamental analysis. Too often, however, only the arrival of the Messiah institutional investor is predicted or holidays are seen as the reason for an upcoming bull or bear season. Here one can state quite clearly that these opinions are nothing other than opinions.

With Mark Hanna from Wolf of Wall Street one has to state again and again: “Nobody… and I don’t care if you’re Warren Buffet or if you’re Jimmy Buffet. Nobody knows if a stock is gonna go up, down, sideways or in fucking circles.” Accordingly, statements brand “expert xyz sees the Bitcoin price at the end of 2018 at 50,000 U.S. dollars” must also be valued. It’s all a fugazi.

A rough rule can be derived from this. If the Bitcoin price is above the MA20, it looks like a bull market, including a bear market. Of course you can argue that this is not a law carved in stone. The “failed attempts” are marked in grey when the Bitcoin price crossed the moving average without the market switching from bulls to bears or vice versa. However, it should be stressed that so far there have only been four such failed attempts. That is 20 percent, which is a very good error rate for such signals.

So when do the cops determine the Bitcoin price again? Instead of saying that “the bull market will come at the end of 2018”, or “when institutional investors come”, you can hi