Bitcoin traded sideways for most of December and struggled to stay above the 200-day moving average.
After a strong October and a new all-time high in early November, Bitcoin encountered a blockade in December and has lost 13.60% since the beginning of the month. This reality is in stark contrast to the popular belief that the price of Bitcoin would hit $ 100,000 by the end of the year.
At the time of writing, Bitcoin is trading around $ 47,500 after closing below its 200-day moving average on Tuesday. The 200-day MA is often used to measure the long-term trend of an asset in traditional capital markets. An asset is generally considered to be in a general uptrend as long as it holds above its 200 day MA.
Bitcoin violently broke below its 200-day MA in March 2020 as the pandemic outbreak spread fear across the world, including capital markets. It took BTC about two months to get back above the moving average, triggering a stellar bull market that should stretch well beyond the end of the year. Bitcoin stayed above its 200-day MA for over a year until China banned Bitcoin mining, re-creating fear among those unaware of how Bitcoin actually worked, and a brief winter for the summer months Price triggered.
Despite the traditional stock market view that an asset could be in a bear market below its 200-day MA, that could mark a selling event for Bitcoin. Given the strong, unique fundamentals of the peer-to-peer (P2P) currency and its history of wiping all other assets over the past 10 years, a drop below a technical indicator can serve as a discount indicator, especially given Bitcoin’s volatility, which makes it fall and rise faster than traditional assets.