In this episode of NewsBTC’s brand new daily technical analysis videos, we take a look at Bitcoin’s log growth chart, Power Law Corridor, and 200/100/50 week moving averages.
Watch the video below.
VIDEO: Bitcoin (BTCUSD) Price Analysis: August 26, 2022
Today’s speech by US Federal Reserve Chairman Jerome Powell is already having an impact on the markets, with Bitcoin losing support at $21,000 and at risk of sinking further into a downtrend. With the crypto market in doubt, in this video we zoomed out.
The logarithmic growth curve continues to support price action
In this magnified view, we take a closer look at Bitcoin’s logarithmic growth chart. A logarithmic growth curve increases rapidly at first but the gains decrease and become more difficult over time. The logarithmic 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, weight is lost faster at first; or conversely, beginner bodybuilding gains accumulate quickly but level off over time.
The log’s growth chart has underpinned the entire history of Bitcoin price action and put an end to every bull market. On Black Thursday in March 2020 and August 20, 2015, Bitcoin left a wick below the log growth chart. 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” This time, is it really different?
The log curve has never been broken | Source: BTCUSD on TradingView.com
Power Law Corridor offers an alternate outlet with bottom bracket
Some might argue that the log curve is subjective – it is. In the video, we chose to draw the curve through the candle closes allowing for a wick below. A slight adjustment to draw on the strands creates more space at the bottom of the curve.
There is yet another longer-term growth model, called the Bitcoin Power Law Corridor, which is less subjective overall. Tool activation aligns with both versions of the logarithmic curve. The 2018 bear market low stopped at the same line where we are now, while the 2020 Black Thursday low fell to the lower level.
Bulls could be ready to power-up! | Source: BTCUSD on TradingView.com
A long-term look at the MA 200/100/50 weeks
For our final long-term look at Bitcoin, we analyze the 200, 100, and 50-week moving averages. Unfortunately, Bitcoin remains below the 200-week moving average, which is a negative sign. The moving average has acted as lower bear market support in the past and could function as resistance now. The 100 and 50 week moving averages are also about to form a death cross – that’s what this tool is calling for.
In the past, when the 100 and 50 week moving averages crossed in Bitcoin, the bottom had already been reached and the crypto market started rising soon after. Again, is this time any different?
Is this time different? | Source: BTCUSD on TradingView.com
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Featured image from iStockPhoto, Charts from TradingView.com