Yesterday Bitcoin (BTC) surpassed one of the most critical points in its history, the 200-week moving average (200W MA). This has only occurred 3 times in the past and has linked with a macro bottom in Bitcoin’s price.
Bitcoin has been dropping since hitting the all-time high (ATH) of $69,000 on November 10, 2021. The fall accelerated from a local peak at $48,200 on March 28, 2022.
After that, BTC witnessed 9 successive bearish weekly candles and one green candle (orange region). It subsequently extended its drop further and printed additional two red weekly candles with over -10% body each (blue arrows).
Yesterday’s daily candle witnessed a body of -15.38% and sent the price down to the $21,925 level at the bottom. This morning, Bitcoin extended its falls, sending it to a low of $20,846.
Bitcoin exceeds 200W MA
In the chart above, the blue line where Bitcoin’s drop looks is now stalling. This is the 200-week moving average (200W MA) — a level of highly high historical importance.
The long-term chart shows that this curve has provided support throughout prior downturn markets. It was not ideal support, and weekly wicks below this level regularly happened. However, frequently weekly closures were obtained above the 200W MA.
Initially, it served as support during the 2015 bear market. Bitcoin consolidated at its (increasing) level for 259 days after the abrupt collapse in January 2015. Only in October 2015 did it restart its upward path.
At the close of the 2018 bear market, the 200W moving average was achieved for the second time in history. At that time, not a single wick was printed below this line, and the consolidation lasted 63 days.
Bitcoin exceeds 200W MA. Image: Tradingview
The last time the 200W MA provided help was during the March 2020 COVID-19 crash. At that time, two extremely lengthy bottom wicks extended well below this level. Moreover, the weekly closing was below the 200W moving average. The decrease preceded a rapid V-shaped rebound, and Bitcoin surged again seven days later. In contrast, consolidation did not occur between April and July of 2020. However, the price was already far more remarkable than $9000.
Thus, by averaging the numbers from past trips to the 200W MA (259 days, 63 days, and 7 days), it seems that Bitcoin consolidates on average 110 days after hitting this curve for such a small statistical sample. If these projections are accurate, the rise might resume around the beginning of October 2022.
Reducing drawdowns vs ATH
According to Glassnode, the decline from the November 2021 ATH to yesterday’s low was 67.27%. This is the most remarkable variation since the March 2020 COVID-19 fall, when BTC was -75.5% below the prior record. At that moment, Bitcoin’s price hit a low of $3941, while the historical ATH from December 17, 2017, was $19,764.
A closer examination of the chart of Bitcoin’s price declines from all-time highs reveals a progressive reduction in volatility. Each succeeding bear market macro bottom has occurred at a price level closer to the associated ATH.
One might thus attempt to draw an erroneous uptrend line (blue), which predicts that the current cycle’s slide from the ATH should stop at about -70%. If this exact amount proves accurate, the macro bottom would be at $20,700. This would correlate with a retest of the historical ATH indicated above from 2017.
If Bitcoin were to continue its slide and reach the depths of the 2015 and 2018 declines (about -85%), then $10,350 would be the objective for the macro bottom.
