After Bitcoin's +26% increase in price last week, as well as +40% within the span of 10 days, many are now questioning whether the bottom is truly in for Bitcoin or if this is just another relief rally. While there may well be a pull-back to $25K (or further) and/or consolidation around $30K prior to further upside, various indicators are already suggesting the bottom is in if history is anything to go by.
Here is a short compilation of 4 indicators, 50 Week MA, MA Ribbon, Ichimoku Cloud and Hash Ribbons (I may add more if others reference them but only if they have been accurate in the past).
Bare in mind that previous performance does not guarantee future results, this is just available data so far for analysis...
1. Breaking back above 50 Week Moving Average
As can be seen from previous bear markets in 2015 and 2019, each time price has closed back above the bearish trending (decreasing) 50 Week MA, it has confirmed a low for the price of Bitcoin. Notably each time there has been the initial support from it when trending bullish (increasing), prior to the rejection that kick starts the bear market. Back in 2021, the situation wasn't much different.
2. Breaking back above Weekly MA Ribbon
Similar to the 50 Week MA, as utilises 5-50 MA in 5 bar increments, each time price has closed back above the bearish formation of the ribbon, price has signalled a low. Historically, price has been unable to move above in bear markets. This is more a broadened perspective of the same concept, as is fundamentally based on closing back above the 50 Week MA.
3. Breaking above 3 Day Ichimoku Cloud
Using a slightly different indicator, the picture is similar to the previous two. Bitcoin has never previously managed to break out of the bearish cloud formation during it's bear markets in 2015 and 2019 until a bullish cross-over occurred, although was close in 2015. Instead, price get's rejected from the cloud until the bottom has formed and price is able to move above it, creating the bullish cross-over.
4. Hash Ribbons 1 Month buy signal
While not always providing a buy signal based on combined network and price strength, such as in 2019 when only a recovery signal appeared, it has none the less never provided a buy signal during bear markets. After the strong +40% close in January, this indicator provided the first buy signal since mid-2021.
5. Breaking above resistance downtrend on Monthly chart
One the simplest ways to analyse whether Bitcoin has formed a bottom is the break of a long-term resistance downtrend on monthly chart. As can be seen in 2011, 2015 and 2018, each time price broke out above a long-term resistance downtrend of at least 6 months (but usually 12 months), price has failed to make new low. Even if such was the case in 2015 that price re-tested near the lows.
In summary, there is a lot of discussion at the moment of not wanting to FOMO into Bitcoin at current prices, given the rapid rise from $20K to around $28K. However, for longer-term investors who have been waiting for Bitcoin to show bullish strength before gaining exposure, then this is admittedly the time, somewhat regardless of price. This was first signalled by the Hash Ribbons indicator around $23K in January followed by the Ichimoku Cloud in February at a similar price, and finally the 50 Week MA / MA Ribbon indicator at around $28K in March, so combined this would be an average of $25K for reference sake.
No doubt there were
other indicators that signalled a bottom earlier (even too early!), and others that may well do so later, but I chose these as they have so far been more reliable in Bitcoin's bear markets.
Poll
