This week, a major warning to bears was seen as a Bitcoin (BTC) price indicator flashed green for just the fourth time ever. Crypto market analyst Mohit Sorout announced that the dollar cost average (DCA) indicator was now “suggesting a raging bull market”. The DCA indicator measures the relative profitability of a hypothetical DCA strategy involving $1 buys per day for a year. Once it crosses into profitable territory, marked as 365 on its scale, major bull markets have historically begun.
DCA is an investment strategy whereby a buyer allocates a fixed amount of capital to gain exposure to an asset at set intervals. This could be buying $10 per week in Bitcoin, with the concept regularly touted as an optimal way of gaining exposure to volatile cryptocurrencies. The DCA Indicator measures the relative profitability of a hypothetical DCA strategy involving $1 buys per day for a year.
The rarity of the buy signals has been noted, with Sorout seeing just three throughout Bitcoin’s history, each precluding serious BTC price upside. Dan Tapiero, founder and CEO of 10T Holdings, declared in a repost of Sorout’s findings that it was a “Rare massive Bitcoin Buy signal”.
However, depending on the timeframe, the Bitcoin bull run signals do not yet point unequivocally to the moon. Caleb Franzen, a senior market analyst at Cubic Analytics who flagged the breakout, is warning that Bitcoin’s latest trip to six-month highs represents a “failed breakout”. The largest cryptocurrency also faces a major hurdle in the form of several moving averages (MAs) overhead acting as resistance for much of 2022. Data from Cointelegraph Markets Pro and TradingView further showed two MAs forming a “death cross” for the first time ever this month.
The bullish signals are a major warning to bears and an indication that the Bitcoin price could be heading for a major rally. However, the fact that the indicators are rare and have historically been followed by BTC price upside should not be ignored. The moving averages act as support and resistance and could be a major factor in determining the price of Bitcoin in the near future.
It is important to note that although the bullish signals are encouraging, they are not a guarantee that the Bitcoin price will continue to rise. Cryptocurrencies are highly volatile and subject to sudden price movements. Investors should always do their own research and make decisions based on their own risk tolerance.
Overall, the bullish signals from the dollar cost average indicator and the moving averages are a major warning to bears and an indication that the Bitcoin price could be heading for a major rally. Although the signals are encouraging, investors should be aware of the risks associated with cryptocurrencies and take all necessary precautions when investing. With the right research and risk management, investors may be able to capitalize on the potential upside of the Bitcoin market.
