For the past few days, bitcoin prices are settling around $8,000 level representing a sideways trend after a series of rises and drops. Dan Morehead, CEO of Pantera Capital, who predicted the BTC price to hit $20,000 by the year-end talks about bitcoin’s 200d moving average flashing a buy signal.
BTC on a sideways trend with its price floating near $8,000
Right now, the bitcoin is at $8,095 level with a loss of 0.14 percent. One of the most popular cryptocurrencies, bitcoin hit its all-time high in mid-December at $20,000. Since then, bitcoin has been through sudden and sharp dips and rises with its value reaching $6,550 level at one point. There has been a lot of reasons for the downward trend that ranges from unclarity on regulations, tax season, huge BTC unloading and much more.
The CEO of Pantera Capital, Dan Morehead whose area of focus is specifically cryptocurrencies and blockchain technology said that bitcoin is currently flashing a buy signal by falling about 75 percent in value and then going at a sideward trend at $8,000 for the past few days.
A sideways trend is when the demand and supply are nearly equal and the movement of the price is horizontal which is right now the ongoing trend in the bitcoin market where the price is hovering near $8,000 level.
“For those who are new to Pantera who might think a fund manager like Pantera would always be saying ‘Today’s a great day to get long.’ we’ve only made four cryptocurrency trade recommendations in seven years: three buy recommendations and one sell/it’s-going-to-go-sideways-for-a-while.”
Bitcoin’s 200d moving average flashes a rare buy signal
The rationale behind the bitcoin market currently flashing its atypical buy signal is the cryptocurrency’s 200 days moving average. The 200 days moving average is basically the average of the closing prices for the last 200 days. This MA is widely used by investors and traders whose breaks represent trading signals.
Bitcoin has just crossed below its 200 day moving average and hit its buy signal again that is rare to come. A 200 day moving average as an indicator would seem like higher this average goes, the more bullish the market and vice-a-versa on the surface. However, when it comes to practice the reverse is actually true.
High reading in this average is a warning that means market might take a reverse soon to the downside. Whereas low readings mean bears are approaching and the shorter the MAs the sooner the market changes.
Pantera further clarified:
“To put a little empirical evidence behind the assertion that it’s a better-than-average day to buy cryptocurrency: if you invested $100 on the day that the bitcoin price crossed below its 200-day moving average and sold a year later, your total return would be 285%. Buy low, sell high.”
Pantera Capital has also made a prediction about bitcoin price that it will hit $20,000 in December 2018.
With bitcoin market flashing a buy signal, are you going to add to your bitcoin stash?