Bitcoin Near 200-Week Average, Entering Historically Strong Buy Zone

Bitcoin is trading near its 200-week simple moving average, a long-term trend line that has historically marked a strong entry point for investors, according to an analysis.

CoinDesk reported on June 18 that Thomas Perfumo, Kraken's chief economist, said Bitcoin fell below its 200-week moving average twice in the past two weeks before reclaiming the level on a weekly closing basis.

Bitcoin was trading at about $63,900, while the 200-week moving average stood at $62,358. Since mid-2017, Bitcoin has closed below the 200-week moving average on only about 10% of trading days. Historically, that range has been a highly attractive buying opportunity, Perfumo said.

Investors who bought Bitcoin below the 200-week moving average posted median returns of 113% after one year and 313% after two years, according to Perfumo. Median refers to the value that sits exactly in the middle when all cases are ranked by return.

Downside risk was also limited, he said. The median time for investors who bought below the 200-week moving average to break even was just two days. The median maximum drawdown over the following year was about 9%.

Perfumo cautioned that past performance does not guarantee future returns. Even so, he said historical data shows Bitcoin at current levels has offered considerable value.