Bitcoin (BTC) bulls may only need a couple of simple moving averages (SMAs) to determine if we have already reached a bottom this halving cycle.
In a twitter thread on June 2, Checkmate, a leading on-chain analyst at crypto analytics firm Glassnode, marked Investor Tool’s metric in “buy the dip” territory.
Enter the “generation zone” for Bitcoin Investor Tool
Investor Tool is a simple yet effective BTC price metric that shows the potential for buyers to enjoy “outsized” returns.
Its creator, the founder of LookIntoBitcoin, Philip Swift, intended to deduce when the BTC/USD pair is likely to be overbought or oversold.
The metric uses the two-year SMA and its multiple of 5x. The two lines are plotted against the spot price and have historically performed well in capturing generational highs and lows.
Now, the BTC/USD pair is below the 2-year SMA for the first time since March 2020, having crossed the line for around a week before the Terra LUNA debacle sent Bitcoin to ten-month lows.
“Bitcoin’s Simple Moving Averages are an advantage when navigating bear markets,” Checkmate commented, adding that there were “entered the generational zone”.
Hayes “more confident” in $25,000 fund after LFG BTC sales
While Bitcoin bulls are barely out of the woods at $30,000, the Investor Tool readings strengthen a narrative that is only just beginning to emerge among analysts.
As Cointelegraph reported, Arthur Hayes, former CEO of derivatives giant BitMEX, suggested this week that May’s Terra-inspired trip to $23,800 might, in fact, mark a long-term BTC price floor after all.
Despite a lot of predictions that point to a fall to USD 14,000, historical patterns may still play a role in how safe Bitcoin is at or near current levels.
Even the Terra episode itself, in which the nonprofit organization Luna Foundation Guard (LFG) liquidated 80,000 BTC, could have cemented solid support, Hayes wrote.
“At bottom, a typically impervious strong hand may be forced to sell due to uneconomic deals festering in their order books. LFG is such a seller. Selling 80,000 physical bitcoins is quite a feat,” he explained.
“After contemplating the nature in which these bitcoins were sold, I am even more confident that the $25,000-$27,000 zone for Bitcoin is the bottom of this cycle.”
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