We’re approaching a critical support line for the price of bitcoin in 2022. We’ll talk about Bitcoin’s 200 weekly MA. We’ll look at what this means to you as an investor, as well as bitcoin’s production and electricity costs, which have always acted as a floor historically, as well as the latest ethereum news, lower cap altcoin news, and much more. However, the crypto market sometimes is too complicated to understand. The one of the useful platform is Jet-Bot, an official broker of the Binance exchange. You don’t need to deposit fund to the platform and can connect your Binance account via API keys. Register now, and don’t worry about crypto.
Significance of Bitcoin’s 200 Weekly MA
We’ve hit it for the first time since the pandemic crash of 2020.
Why is this indicator important? What’s the significance? Well, the 200 weekly MA has been a support level for bitcoin for the last seven years since around 2015. The times we have tested this support were in the bear markets. The pandemic crash of 2020, the bear market of 2019, we rode that line and then, of course, seven years ago in the bear market of 2015.
So what does this mean to you? For the last 7.5 years, the bitcoin 200 weekly MA has acted as an important historical support line, holding up the bitcoin price. Will it now be broken amid recession fears? That remains to be seen, but it has always been a great buying opportunity if you could get bitcoin at these levels. To go a little bit further with the details on the bitcoin price chart, no weekly candles have ever closed under the 200 MA. This includes the drop to $3,100 at the bottom of the 2018 bear market as well as the coveted crash of March 2020. There have only been brief wicks below the support level, quickly bought up by buyers.
Just recently we wicked below it, but it got back up and the support held. Now the question to you is: how much credence do you put into a metric like this? On one hand, to take the skeptical view, this is just a line in the sand made by people. We could easily fall below and make new history. Anything is possible. On the other hand, this is held time and time again.
Bitcoin Lowest Weekly RSI since 2011
Next up, bitcoin just reached its lowest weekly RSI since 2011. RSI stands for the relative strength index. RSI is a momentum indicator used in technical analysis that measures the magnitude of recent price changes, i.e., momentum to evaluate overbought or oversold conditions in the price of a stock or other asset. An asset is usually considered overbought, which is bad. That would mean you probably need to sell when the RSI is above 70 and oversold, which is good. That means you want to buy when it’s below 30%.
Looking at the weekly chart for bitcoin and the RSI comparison, we can see this has usually been pretty accurate. This is from 2012 to 2022 and we can see RSI has signaled overbought in bull markets at the top of bull markets. RSI never really fell below oversold territory in the bear market of 2015, it became overbought in the bull market of 2017, and briefly fell below it in 2018. We were oversold in the pandemic crash of 2020. We’ve just touched oversold.
Again, this does not mean that for the next two months, three months, whatever, it does not mean we can’t bounce around below the oversold territory. We certainly can, but this has always been a great signal that now could be a great time to start DCA in if you believe in bitcoin in the long run. The RSI is at 26, which anything below 30 is considered oversold, and for comparison, the bear market of 2015 only hit 27. In December of 2019, it hit its lowest ever of 29. Right now it’s a 26 and this is the most oversold it has been in 11 years. In the past, every single time bitcoin’s RSI hit these oversold condition levels, it then rallied back to 50 points over the next approximately six months and hovered around that price, and after that it never returned to those prices again. Do you put credence in metrics like this? Do you like this? Do you have a comment on this?
And by the way, if we go into a global recession later this year, this could absolutely dip lower or trade around these levels for months. Anything’s possible, but if you take the long-term approach, it might signal a great time to start DCAing.
Bitcoin Hits Lower Bound of Its “Production Cost”
And the final metric I want to share with you is bitcoin’s production slash electricity costs because right now it has tapped the lower bound of its production costs in addition to the 200 weekly MA. Why is the production cost significant?
Well, citing the article from 2019, production costs of any commodity have often acted as a historic floor, and the bitcoin price is no exception. So basically, this is saying if you take into consideration the mining equipment and the electrical costs, bitcoin’s market price should at least have a floor of that if that’s what people are paying to actually produce the bitcoin. The relationship between bitcoin miner production costs and the price of bitcoin itself is summarized best by none other than Satoshi himself. Here is what Satoshi said about this back in 2010:
‘The price of any commodity tends to gravitate towards the production cost. If the price is below the cost, then production slows down. If the price is above the cost, profit can be made by generating and selling more at the same time.’
This increased production would increase the difficulty of bitcoin mining, pushing the cost of generation towards the price, which is always fluctuating and ever moving, but it can act as a nice support. Here is that chart showing the 200WMA as well as the range of production costs in bitcoin’s history:
This chart is from 2019 to where we are today. We have just tapped the lower bound based on this chart. We’ve only ever gone below in the pandemic crash of 2020 and that immediately got bought back up, but like these other metrics, this is another one to consider.
OpenSea Announces New Security Features for Ethereum NFTs
What about Ethereum? Well, OpenSea, one of the biggest users of Ethereum, has just announced new security features to protect users from NFT scams. In light of the growing number of NFT scams, OpenSea has announced the launch of a new feature that will automatically hide suspicious NFT transfers, very much needed from the point of view of their marketplace. This will also help to protect users from being scammed and ensure that only legitimate transactions are visible. Some other areas they’re making investments in to enhance trust and safety include theft provision, IP infringement scaling review and moderation, and reducing critical response times in high-touch settings. I like it as far as centralized entities go.
Mina Protocol Ranks #1 in GitHub Commits
What is happening with lower-cap cryptocurrencies? The Mina protocol, which is known as the world’s lightest blockchain, is ranked number one in GitHub’s crypto commit history out of almost 300 cryptocurrencies within the last year.
What developers are working the hardest, or at least putting in the most commits? Well, number one is Mina over the last year, then Solana, Trust Wallet, etc. It is good to see the developers building.
Elrond (EGLD) Ecosystem is GROWING!
The next piece of news for the Elrond ecosystem. Let the games begin. The biggest names in crypto are ready to enter Cantina. This is a play to earn project. I’m invested in one of the first free to play and play to earn metaverse games in the market built on Elrond. It features a top-down tactical arcade shooter game. It’s a tactical arcade shooter game with both single-player and intense multiplayer battle modes.
The news today is that they have recently completed their 4.5 million dollar funding round co-led by Elrond and Mechanism Capital, as well as other investments from Crypto.com Animoka Brands, Morningstar Ventures, etc.
Cantina Royale will be launching in July with the following unique game modes and features: the first mobile blockchain game on multiple platforms. I like it this way. So more people have cell phones than computers. It’s free to play and play to earn, so for everybody, there is no need to connect an external wallet and there are zero gas fees for the end users to allow a seamless playing experience. So it’s so cool to see the progress with Elrond.
Binance to Become a Super App w/ NEW Partnership
Speaking of progress with Binance, Binance aims to become a super app with a split crypto partnership. This partnership with the super app enabler will allow users to pay for taxi services and food deliveries with crypto using Binance Pay. This is from the world’s largest crypto exchange, Binance, trying to get more people to accept and use the BNB token. When live, this integration will allow Binance users to pay for many, many daily things with BNB. Here is that announcement from CZ on Twitter:
I wonder how many people will use something like this. Call me crazy, but I see crypto more as an investment, so I’d rather huddle my crypto and spend my dirty fiat, but that’s me. Call me crazy.
[This article is a transcription of a video made by Altcoin Daily]
Original video: https://youtu.be/Pq9kDbfz2d0 ]