According to Kraken analysis, bitcoin's recent dips below its 200-week moving average have historically delivered median returns in excess of 100% over a year. The 200-week simple moving average represents the token's average price over that period, providing traders with a clear glimpse of the long-term trend while cutting through day-to-day noise. As reported by Kraken, closes below this level have been rare, occurring on only about 10% of trading days since mid-2017, and have historically marked unusually attractive entry points for buyers. Recent market data shows that $1,000 invested in February 2021 when Bitcoin was around $45,000 would be worth roughly $1,500 today, demonstrating the significant volatility and potential returns available during these entry periods.
As of writing, bitcoin is trading at $63,900, just above the 200-week SMA of $62,358. According to Kraken, that level is the 200-week simple moving average, which represents the token's average price over that period. Bitcoin briefly slipped below its 200-week moving average twice in the past two weeks, a rare event that Kraken says has historically marked strong entry points for buyers. The token climbed back above the 200-week SMA by the end of each week during these brief dips. During the recent period, Bitcoin hit $69,000 at its peak and dropped to $15,000 at its low, highlighting the significant volatility that can occur during these entry periods.
According to Kraken's analysis, historically, buyers at this level have gone on to see median returns north of 113% over the following year and 313% over two years. Median returns mean that half of buyers enjoyed higher returns than the projected 113% while the other half ended with less. The pain of holding through these periods has been minimal, with Kraken noting that for those who accumulated below the 200-week MA, the median time to break even on their investment has been just two days, while the median maximum drawdown over the subsequent year has been only 9%. However, Kraken emphasized that past performance is no guarantee of future results, and the recent market volatility demonstrates the inherent risks in cryptocurrency investments.
