Powell versus Bitcoin price log curve
In this episode of NewsBTC’s brand new daily technical analysis videos, we look at the Bitcoin logarithmic growth curve, the Power Law Corridor, and the 200/100/50-week moving average.
Take a look at the video below.
VIDEO: Bitcoin Price Analysis (BTCUSD): August 26, 2022
US Federal Reserve Chairman Jerome Powell’s speech today is already having an impact on the markets, with Bitcoin losing support at $21,000 and in danger of falling deeper into a bearish trend. With the crypto market in doubt, we zoomed out in this video.
Log growth curve continues to support price action
In this zoomed-out view, we take a closer look at the logarithmic growth curve for Bitcoin. A logarithmic growth curve increases quickly at the start, but gains slow and become more difficult over time. The log growth curve is closely related to the law of diminishing returns.
This type of early growth forms naturally. For example, children learn more easily than adults; when dieting, the weight comes off faster to start; or conversely, strength training gains for beginners increase rapidly but plateau over time.
The log growth curve has supported the entire history of Bitcoin price action and put an end to every bull market. On Black Thursday in March 2020 and 20 August 2015, Bitcoin left a week under the stock growth curve. Each time resulted in a powerful bull run. According to legendary investor Sir John Templeton, “The four most dangerous words in investing are, this time it’s different” Is this time really different?
The log curve has never been broken | Source: BTCUSD on TradingView.com
The Power Law Corridor offers an alternative roof with lower support
Some might argue that the log curve is subjective – it is. In the video, we have chosen to draw the curve across candles, so that a wick below. A little adjustment to pull across the wicks creates more space at the bottom of the basket.
There is yet another long-term growth model, called the Bitcoin Power Law Corridor, which is less subjective overall. Turning on the tool aligns with both versions of the log curve. The bottom of the bear market in 2018 stopped at the same line we are on now, while the Black Thursday bottom in 2020 fell to the level below.
Bulls could be ready to power-up! | Source: BTCUSD on TradingView.com
A long-term look at the 200/100/50-week MA
For our latest long-term look at Bitcoin, we analyze the 200, 100 and 50 week moving averages. Unfortunately, Bitcoin remains below its 200-week moving average, which is a negative sign. The moving average has acted as bottom support for the bear market in the past and may act as resistance at the moment. The 100- and 50-week moving averages are also about to form a death cross – which is the reason for calling this tool.
In the past when the 100 and 50 week moving averages cross in Bitcoin, the bottom was already in and the crypto market started to move up shortly after. Once again, is this time different?
Is this time different? | Source: BTCUSD on TradingView.com
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Featured image from iStockPhoto, Charts from TradingView.com
