Bitcoin's 200WMA Divergence Signals Bull Market Momentum, Says Crypto Expert

Renowned crypto analyst PlanB has pointed out a historically significant technical pattern: Bitcoin's 200-week moving average (200WMA) is diverging upward from its 200-week geometric mean

Renowned crypto analyst PlanB has highlighted a historically significant technical pattern in Bitcoin's 200-week moving average (200WMA). According to his analysis, the 200WMA is diverging upward from its 200-week geometric mean, which could be a signal of the potential continuation of the bull market.

This divergence, which PlanB has visualized in a chart shared on X (formerly Twitter), has previously marked the beginning of strong upward trends in 2013, 2017, and 2020/2021.

"BTC 200WMA (black line) is diverging from the 200W geometric mean (grey line) indicating the bull market is building," PlanB stated.

To put this into perspective, the multi-colored dots in PlanB's chart reflect months until the next halving, showcasing Bitcoin's price action in relation to the halving cycle.

As the current trend mirrors past pre-rally behavior, investors may see this as a confirmation of early-stage momentum in the new cycle. However, it's important to note that this divergence could also herald a bear market rally, which would see Bitcoin experience a strong rebound before ultimately succumbing to bearish pressure.

This divergence is a measure of the 200WMA's slope against the geometric mean, which remains relatively constant over time. A steeper slope on the 200WMA indicates a more significant increase in price over the past 200 weeks, suggesting a build-up of bullish sentiment.

Conversely, a shallower slope suggests weaker bullish sentiment or the potential for a bear market rally, where the price rises quickly but does not sustain the upward movement.

The variance between the 200WMA and geometric mean can be observed in periods of strong upward or downward trends. When the 200WMA diverges significantly from the geometric mean, it typically signals a reversal of the overarching trend.

In the case of divergence, the 200WMA is outpacing the geometric mean, which is a precursor to parabolic price rallies. However, in the instance of convergence, the 200WMA lags behind the geometric mean, which is observed during periods of bear market rallies or when the trend is set to change.

This technical divergence is a valuable indicator that can provide insights into the prevailing market sentiment and potential shifts in the prevailing trends. As investors follow this pattern and its implications for Bitcoin's price action, they can gain a deeper understanding of the crypto market's dynamic shifts and its response to the halving cycle.

As the crypto market continues to evolve, examining these technical patterns and their historical context can offer valuable clues about the market's direction and the potential for sustained bullish or bearish pressure.

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