Bitcoin is the best investment of 2020, up more than 150% since the start of a year of more uncertainty than ever before. That same uncertainty has helped bring the cryptocurrency back to prices near $ 20,000.
And instead of rejection and bear This time around, Bitcoin’s most profitable buy signal ever triggered, suggesting that this year’s returns are just the beginning of things to come. Here’s a closer look at the meaning of the signal, and some theories about what might be expected if history repeats itself and the tool proves accurate again.
Bitcoin Hash Ribbons Trigger Buy on Daily Time Frames, Current Consolidation Can Be Bullish
Bitcoin is a unique asset and requires one specific set of tools to properly analyze the health of the asset. Technical analysis is useful for understanding trend turning points and where resistance and support may lie.
But what has been more beneficial lately than charting price patterns or looking at traditional indicators and oscillators give unsuccessful signals left and right, has focused on fundamentals.
Data related to an increase in newly created BTC addresses, assets moving off exchanges en masse and more has been much more helpful in determining what could happen next in the crypto market.
Another fundamental tool created by Bitcoin expert Charles Edwards is kind of both a technical indicator and a quantitative visual tool in one. The hash ribbons convert the hash rate and difficult mines into moving averages that can be used to indicate when to buy and when miners capitulate.
That buy signal, according to the tool’s maker, has just triggered, and with it happening just below $ 20,000, the recent consolidation could be bulls building strength to rip through resistance.
The Hash Ribbons signaled "buy" on daily timeframes | Source: BTCUSD on TradingView.com
The most profitable signal in Crypto starts with a blue dot and ends with investors in the green
The ‘blue dot’ indicating buy has just appeared on daily time frames, according to Edwards. But this is especially noteworthy because the Hash Ribbons just so happens to be Bitcoin’s most profitable buy signal.
The chart below shows how effective it has been since Bitcoin’s low in 2018, the first major buy signal since its 2017 peak. Over the past two years, there have been more signals that resulted in a strong advantage each time. But those who have just learned about the hash ribbons so far still haven’t seen what the tool is capable of.
The trigger hasn't yet appeared on weekly timeframes which have in the past proven profitable | Source: BTCUSD on TradingView.com
If we zoom out further on the chart below, the last buy signal after each halving is what is the start of the bull market, and Bitcoin never returns to previous prices. The fact that this is triggering again, just as Bitcoin is trading below its previous peak, is extremely optimistic for the future of the cryptocurrency market.
Zooming out the furthest shows why the indicator is called the "most profitable" | Source: BTCUSD on TradingView.com
Consolidating under the resistance is typically a bullish event, as if the resistance were a threat, it would likely happen when the asset first approached. When the crypto asset consolidated below $ 10,000 earlier this year, the result was the journey here.
Related reading | The dollar losing a ten-year trend line could cause Bitcoin to skyrocket
With a buy signal that in the past resulted in 5800% and 3600% returns with Bitcoin at the highest level ever, the purpose of this current signal could be his biggest climb ever.
Featured image from Deposit Photos, Charts from TradingView.com