Bitcoin 20 DMA seems to have crossed 50 DMA, here is how it could be bullish for the cryptocurrency.
The bullish Bitcoin crossover
As one BTC technical analyst pointed out on Twitter, two important indicators of the cryptocurrency have just crossed.
The two measures are the Daily Moving Average (DMA) 20 and the DMA 50. Before looking at the data, it is best to understand these two indicators first.
Moving Averages (MAs) help smooth the price data for Bitcoin as they take averages of prices over a specific time period and are constantly updated or ‘moving forward’.
The indicator “smooths” the price because it smooths out the effects of small fluctuations on the price, resulting in a smoother curve.
The Daily Moving Average (DMA) 20 averages the daily price over 20 days, while the DMA 50 uses data from the last 50 days.
Related reading | On-chain data shows Bitcoin’s daily trading volumes up 94%, rally may not be over yet
Now here is the chart that shows the variations of 20 DMA and 50 DMA for BTC:
The BTC 20 and 50 DMA have their first crossover since May
As the chart above shows, the Bitcoin 20 and 50 DMA indicators currently have a cross where the 20 DMA curve appears to be pulling above the 50 DMA.
The last time this type of crossbreeding happened was in October 2020, just before the massive bull run where BTC set a new all-time high (ATH).
However, these two crosses aren’t the only ones on the chart. There is another different type of crossover where the 50 DMA line flies above the 20 DMA curve. This happened in May, right at the top of the rally.
From these observations, it appears that when the 50 DMA breaks over the 20 DMA, an uptrend could ensue. But if the opposite happens, a bull run could be here.
At the time of writing this article, the price of BTC is moving around $ 39.3,000, up 1% over the past 7 days. Over the past month, the value of the crypto has increased by 16%.
Below is a chart that shows the Bitcoin price trend 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 again appeared to fall. However, today the coin has taken a turnaround for the better as the coin appears to be recovering quickly.
Related reading | Trend Line Touch could send Bitcoin on a tear
It’s hard to say how far the crypto will go this time around, as the $ 40,000 resistance will prove to be a challenge again. BTC could get stuck in a limited market below the $ 40,000 mark and slowly lose volatility again. However, if the DMA crossover is anything to go by, a bull market could be ahead.
Featured image from Pexels.com, charts from TradingView.com