- Bitcoin
has shown an increase of over 1% in the last 24 hours and is currently trading at $27,100. Bitcoin’s current market cap is over $528 billion. - In this article, we will explore a metric that will show us optimal buying and selling points for Bitcoin based on its 2-year moving average and 5 times that average.
- Historically, buying Bitcoin when the price falls below the 2-year MA (green line) has yielded significant returns. Selling Bitcoin when the price crosses above the 5 times the 2-year MA (red line) has also been historically effective.
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According to the 2-year moving average in Bitcoin, is BTC currently at a suitable level for buying? At which levels should Bitcoin investors sell their assets?
Optimal Buying and Selling Levels for Bitcoin
While Bitcoin tries to sustain itself above the $27,000 price level, we will examine how Bitcoin’s 2-year moving average has behaved. Bitcoin has shown an increase of over 1% in the last 24 hours and is currently trading at $27,100. Bitcoin’s current market cap is over $528 billion.
In this article, we will explore a metric that will show us optimal buying and selling points for Bitcoin based on its 2-year moving average and 5 times that average. The purpose of using the 2-year MA multiplier is to serve as a long-term investment tool. The metric highlights periods when buying or selling Bitcoin could yield significant returns.
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To do this, it utilizes the 2-year moving average (MA) line and additionally the 5 times the 2-year MA x5. (The x5 multiplier is not relative to its own time frame but is based on the price values of the 2-year moving average.)
As seen in the chart above, the green line represents the 2-year moving average. The red line, on the other hand, is 5 times the 2-year moving average. Historically, buying Bitcoin when the price falls below the 2-year MA (green line) has yielded significant returns. Selling Bitcoin when the price crosses above 5 times the 2-year MA (red line) has also been historically effective.
Currently, Bitcoin is below the green line, indicating that it may be a suitable time to buy Bitcoin. The green line, which is the 2-year moving average, is currently at $31,300, while Bitcoin is trading at $27,100. As mentioned above, purchases below the green line are believed to be profitable.
The red line (5 times the 2-year moving average) is currently at $156,501. According to the metric’s explanation, investors can consider selling when the BTC price crosses above the red line.
Historical Data Supports This Metric
We can determine whether this metric is accurate by examining the past. In the past, the Bitcoin price has come close to the red line in this metric. As seen in the visual below, when the Bitcoin price crossed $50,000 in 2021, it approached the red line and indicated that selling was favorable according to the metric. Subsequently, the Bitcoin price fell below the green line. Investors who followed the metric by buying below the green line eventually turned profitable.
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As Bitcoin gains acceptance, it moves through market cycles. These are created by periods when market participants are excessively enthusiastic, causing prices to overextend, and periods when they are overly pessimistic, causing prices to contract significantly.
Identifying and understanding these periods can benefit long-term investors. This tool provides a simple and effective way to highlight these periods.
