Bitcoin analysts weigh significance of lift off from 200-day moving average

Recent market moves have placed two major blue-chip digital assets trending back above their long-term moving averages, often cited by technical analysts as a pivot from bearish to bullish sentiment.

Bitcoin, whose price surge this week saw the asset rise more than 14% to top out at a yearly high above $35,000, first crossed over its 200-day moving average on Oct. 16. On the weekly view, BTC has also crossed that threshold over the same period.

The 200-day MA is a widely observed technical indicator used by traders and analysts to gauge the long-term trend of an asset. 

When the current price of an asset is above its 200-day MA, it’s generally considered to be in an upward trend, signaling bullish sentiment. Conversely, when the asset’s current price is below that average, it is seen as a bearish indicator. 

Or, so the thinking goes from those looking to read the tea leaves of recent events. Earlier warning signs this year, presented by an ominous daily “death cross,” failed to amount to notable sell-side price action. Instead, bitcoin rose 7.6% to test long-term moving average resistance at the beginning of the month.

“The move above is more significant when volatility increases and there is a notable trend shift,” Sam Holman, derivatives analyst at Zerocap told Blockworks. “In 2023, it’s been trading above and below quite frequently this year so it holds less merit currently.” 

Monday and Tuesday’s $4,000 price bump has further widened the gap between the asset and its closing price over the last 200 days, representing a more than 20% difference.

“I’d expect it to hold as a support level if we see a retracement from the current levels lower,” Holamn said. That posits a potential pullback to $28,000 based on the average’s trajectory.

Michael Silberberg, Head of Investor Relations at Alt-Tab Capital told Blockworks detractors are being proven wrong, with $400 million in short liquidation during the previous 24 hours.

“Retail investors are making their move to invest in the market before the institutions change the name of the game forever, with spot buys outpacing sells by 50%,” he said.

The surge appears to have been initiated by reports that BlackRock is gearing up to launch a spot Bitcoin ETF, K33 Research wrote in a note on Tuesday. Slated for cash seeding in October, BlackRock has designated the ticker “IBTC” for its potential upcoming bitcoin ETF. 

Ether (ETH) too has followed suit having crossed above its 200-day MA in late Tuesday trading. The asset is just shy of $10 from its closing price over the same period, meaning it would take a small move to the downside to bring the long-term technical view back into seller territory.

While the asset has lagged behind, ether has continued to exhibit signs of resiliency, notching its first daily higher high close since July.

According to data provided by Etherscan, daily transaction counts have held steady for the previous six months after briefly spiking to 1.6 million on Sept. 13.  Active ether addresses have also kept their balance, nestling along the 400,000 total over the same period.

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