For 45 weeks, bitcoin kept hitting the same level on the chart and getting pushed back down. In the week ended Sept. 20, it finally closed above it.
The level in question is the 50-week moving average. Alex Thorn, head of Galaxy Research, said the weekly close above it could be an important confirmation that the market’s bear phase may have run its course and that a new uptrend is upon us. It’s an aggressive call, but Galaxy’s own historical data supports it, with some caveats.
Galaxy’s record: 11 out of 13
Galaxy studied bitcoin’s major downturns going back to 2011. Over that period, there were 13 occasions when bitcoin closed a week back above its 50-week moving average.
In 11 of those, no new low followed. By the time the crossover appeared, the worst of the sell-off was already over.
Galaxy has called the average a kind of ceiling during bitcoin’s big drawdowns. After the price falls below it, attempts to win it back have historically failed until the market is nearer a lasting bottom. When a breakout did hold, it signaled the end of a bear market and opened the door to a strong bull run.
Several of the crossovers that preceded those rallies appear above. Treat the multiples with some caution. Early BTC price data is inconsistent, so the figures are approximate. They show how big the subsequent rallies were, but they don’t prove the moving-average crossover caused them.
The two misses
Past performance is no guarantee of future results, and this signal has failed before.
Both failures came during the turbulent period from late 2021 into early 2022. Bitcoin climbed briefly above the average, turned lower and eventually slid toward $16,000. Galaxy pinpoints those failed reclaims as the crossovers of Dec. 26, 2021, and March 27, 2022.
That’s worth remembering. A signal that works 11 times out of 13 is useful, but it remains only a signal. The most recent failures happened in the last cycle, and traders remember those best.
Why the weekly close counts
Bitcoin trades nonstop, but its weekly candle closes at 23:59 UTC on Sunday, with a new one opening right after. A candlestick is how a chart represents one period’s price action, here an entire week.
This time the weekly candle actually closed above the 50-week average rather than simply poking through it. Analysts generally give more weight to a weekly or daily close above a major moving average than to a brief move through it, since a close filters out intraday noise.
The 50-week moving average is straightforward: it’s the average weekly closing price over roughly the last year, and analysts often treat it as a proxy for bitcoin’s long-term trend. In a healthy advance, bitcoin tends to trade above the line. During extended declines, rallies often stall beneath it.
Where bitcoin trades now
Bitcoin gained nearly 6% over the week and traded around $81,000, extending its rebound to 29% over the past 35 days. At the time of writing it was near $81,450, with the 50-week average at $78,115. The ticker has since shown BTC at $84,327.90.
If history repeats, the reclaim suggests the bear-market bottom may have been set near $60,000 in recent months. It also raises the possibility that bitcoin could keep rising toward new highs.
The margin is thin, however. Roughly $3,300 separates the price from the line, and the signal only matters if bitcoin stays above that average in the coming weeks. Watch the Sunday close at 23:59 UTC. If a weekly candle ends back below about $78,115, you’re looking at the 2021 script, not the 11 wins.