Bitcoin above its 50-week moving average: a bullish signal according to Galaxy Research

Forty-five weeks of famine. Last night, Bitcoin closed its trading week above its 50-week moving average, an indicator that traders monitor like an underlying trend thermometer. This Sunday morning, Bitcoin is trading around $81,200, according to CoinMarketCap data.

He hadn't done it for 45 weeks. The trigger came from a message from Alex Thorn, head of research at Galaxy Digital: according to him, each time Bitcoin returned to this average in the middle of a bear market, the low point had already been recorded.

We still had to see if history repeated itself, or if Bitcoin would once again get tripped up.

Bitcoin and Galaxy Research: a signal that is right 11 times out of 13

Alex Thorn is no stranger to the sector: he worked for a long time at Fidelity before becoming head of research at Galaxy Digital, one of the major American crypto investment houses. In a message published on September 21, he recalled that the 50-week moving average was around $81,800 at the end of August, before sliding towards $81,100 the following Sunday.

The figure which gives weight to the assertion comes from a broader study by the Galaxy Research team itself: out of 13 reconquests of this average recorded since 2011 across six completed bear markets, 11 have held without a deeper low subsequently contradicting them.

The only two false signals date back to the 2021-2022 double peak, in December 2021 and then in March 2022. Eleven times out of thirteen, it's starting to look like something other than a coincidence.

Bitcoin, for its part, is up 29% over the last 35 days, enough to turn a few heads among short sellers.

From $63,000 to $81,000: Bitcoin’s bumpy path

A month and a half ago, the picture was completely different. The price flirted with the $63,000 zone, against the backdrop of a still hesitant market, before spot Bitcoin ETFs recorded their best month of the year in August. A floor, or a bottomless pit?

In short, no one would have bet big on such a clear rebound, even less on such a rapid turnaround. Thirty-five days later, however, the price is close to $81,000, at $80,326 precisely according to CoinDesk data from September 20.

The rise owes nothing to a long, calm river: it happened in fits and starts, between buybacks of short positions and erratic ETF flows which changed direction overnight. The result does not change: 29% in a little over a month, enough to put the church back in the middle of the village for the sellers who were betting on a prolonged capitulation.

82,000 dollars, the wall which reminds us that nothing is decided for Bitcoin

There remains an obstacle, and not the least important one. The $82,000 zone concentrates, as we recalled at the end of August, nearly 8% of the circulating supply based on on-chain data from Glassnode, or around 1.6 million bitcoins purchased between $80,000 and $82,000. So many investors likely to resell as soon as they go back into the green.

Galaxy Research is also putting its feet in the game, with a formula that sums up the caution required: “a low point always produces a reconquest of the 50-week moving average, but a reconquest does not prove a low point”. In other words, the signal has a good track record, not an automatic entry fee into a new bull market.

The macro context, with Fed policy in mind, will weigh at least as much as any technical indicator in the weeks to come. Selling the bear's skin before killing it is exactly the risk that those in a hurry are taking at the moment.