In this analysis, we’ll dive into the world of Bitcoin and explore three less-discussed, long-term indicators. To get the clearest perspective over an extended timeframe, we’ll be focusing on the monthly chart.
It’s essential to keep in mind that these indicators are all about signaling long-term trends, with a horizon exceeding two years. Short-term price fluctuations are still very much in the picture, even when the broader trend remains bullish.
Indicator 1: Chaikin Oscillator
The Chaikin Oscillator is a nifty tool in technical analysis that helps gauge the accumulation and distribution of the Moving Average Convergence Divergence (MACD). The key insight here is that every time this line crosses 0 from below, it’s typically followed by a bullish price surge. An interesting observation is that this indicator required two such crosses in 2012 and 2020 before the “real” bull run took off. Fast forward to today, and since this indicator crossed the zero mark back in March and retested it last month, there’s a growing confidence that this time around, we might only need one such cross.
Indicator 2: Stochastic Momentum Index – SMI
Both the Stochastic Oscillator and the Stochastic Momentum Index (SMI) serve as handy tools to gauge momentum. They’re often favored by financial traders for deciphering the psychological currents and their connection to price shifts. An intriguing pattern emerges here: each time the SMI crosses the 40 line from below, turning green, Bitcoin tends to embark on a bull market, often accompanied by significant price movements.
Indicator 3: True Strength Index – TSI
The True Strength Index, a momentum oscillator, works its magic by providing trade signals based on overbought/oversold conditions, crossovers, and divergence. What’s particularly eye-catching is that the blue (fast) line has crossed the red (slow) line for the third time in Bitcoin’s history. Remarkably, each previous instance was followed by a bull market.
So, the big question: Is the bull market already underway? According to these indicators, the answer seems to be a resounding yes. The signs are pointing towards Bitcoin entering a new 2-3 year bullish phase. However, it’s important to remember that even during such extended bullish periods, there can still be times of bearish price action, as history has shown us.
On the flip side, there’s the looming specter of a potential recession in the USA. Historically, recessions haven’t been favorable for stocks, and it’s safe to assume that the same could apply to cryptocurrencies. Although the correlation between stocks and crypto is currently quite low, it’s crucial to recognize that this could change down the road.
In the grand scheme of things, there are risks, but all signs seem to be pointing toward the dawn of a new long-term bullish trend for Bitcoin. It’s an exciting time in the crypto world, filled with potential, but as always, it’s a journey with its fair share of twists and turns.