A key metric that measures momentum Bitcoin The price fell to its weakest level since March.
Last week, of bitcoin The Z-score of its 200-day moving average fell below 1.0, where it has more or less remained ever since.
i.e. current Bitcoin The price is only one standard deviation below its average daily closing price over the past 200 days.
this time last month, a few days later Bitcoin Having printed its high for the year above $31,000, bitcoin’s Z-score for its 200DMA was 2.27.
of bitcoin Price momentum has waned over the past few weeks as traders booked profits in the wake of this year’s impressive rally and how far bitcoin could head for the rest of the year amid a continuing cloud of uncertainty regarding the US crypto regulation outlook. I lowered my optimism. And by how much will the Fed cut interest rates in the second half of the year.
Logically, higher bitcoin transaction fees amid a boom in block space demand as the new BRC-20 standard for crypto tokens issued directly on-chain gain in popularity are also weighing on the price.
This certainly acts as a deterrent to the more traditional use of blockchain as a digital currency ledger – both the number of active daily users and the number of new addresses interacting with the blockchain on a daily basis has been on the rise in recent weeks. Although fell off the cliff, the daily transaction reached a record high.
Is now a good time to buy?
While this in no way guarantees that the price of bitcoin will not decline further in the short term, a Z-score of 200 DMA of around less than one has often been a good time to buy bitcoin if the cryptocurrency is bullish. Considered in the early to mid stages of the run.
For example, take the 2015 to 2018 bull run.
The line that marks bitcoin price one standard deviation above the 200DMA appears to be acting as a strong level for several years.
While this was not the case in 2019 and early 2020, as bitcoin recovered from its 2018 bear market, this appears to have been the case in late 2020 as the bitcoin bull market went into overdrive due to massive fiscal and monetary stimulus. .
In the context of the current bitcoin market and fundamental background, the recent drop below 1.0 on the Z-score for the 200 DMA could be a good medium to long term buy signal.
That’s because macro conditions are expected to become more favorable during the rest of the year – US interest rates peak, regional banks remain on the rocks (creating safe-haven demand for “hard money” like bitcoin and gold). do) and inflation is coming back under control (giving the Fed more room to finally start with rate cuts).
Meanwhile, a Group of technical and on-chain indicatorsPlus the analysis of bitcoin’s long-term cycle is all shining that the cryptocurrency has entered the early stages of a new bull market.
Near-term bearish predictions of a retest of key long-term support at $25,000 may well come true, with bitcoin seemingly in a short-term downtrend channel and still trading below its 21 and 50-day moving averages.
But many long-term bitcoin investors and bulls will be waiting for an opportunity to get bitcoin at $25,000.