If you’ve been watching the Bitcoin prices in the past few days, you will not only have seen the price skyrocket, but Bitcoin has broken through the 20-day SMA.
The SMA is the Simple Moving Average. Moving average envelopes are percentage-based envelopes set above and below a moving average. This creates parallel bands that follow the Bitcoin price. With a moving average as the base, moving average envelopes can be used as a trend following indicator. The envelopes can also be used to identify overbought and oversold levels when the trend is relatively flat.
As you can see, the last time we broke through the 20-day moving average was during the summer, where BTC jumped up from $9K to $11K and held there, had a slight correction down to $10K, and then held slowly moving up to $11K. Now we are seeing similar price action, where from $11K we jumped up to $13K and then now up over $15K, hitting a global price high of $15,889.18.
Now the price has corrected some, but with the U.S. Presidential race still officially undecided, but with challenger Biden winning, there is still a strong possibility the price will hold for a day or two and then push back up. Once we break through $16K we will begin to see FOMO as we hit new all time highs not seen since 2017, where we peaked at around $20K.
We will see huge sell pressure as those who have held from 2017 may want to recoup some of their costs, but we will also see new entrants with this new wave, so if we can hold above $16K then in 2021 when the new U.S. President takes office, we could see even higher prices which will of course bleed into other cryptocurrencies like Ethereum, which is set to release ETH 2.0 also next year.