It’s the age-old question when it comes to investing: is now a good time to get in? When it comes to Bitcoin, there are plenty of indicators and ways to answer that question. Unfortunately, it is never possible to provide certainty, there is always a certain amount of uncertainty and risk attached to investments.
Today we take a closer look at one popular indicator to see if it might be a good time to buy Bitcoin.
The 2-Year MA Multiplier
The tool we’re looking at today to determine if it might be a good time to get into Bitcoin is the 2-Year MA Multiplier. This is an indicator developed in 2017 by Philip Swift. In essence, it is a very simple indicator, looking at two different moving averages.
It uses the 2-year moving average as the bottom price and then the factor of five of that line as the top. Right now, the two-year moving average is about $33,000, which brings five times that to $166,000.
You often see Bitcoin bivouacking between those two lines. At this point, we just got out of a bear market and Bitcoin is trading below its 2-year average, which is a fairly rare situation in itself.
In that respect, you could say that Bitcoin is relatively cheap at the moment. On the other hand, of course, we still have to see if the price can manage to break above the green line again this time. It now strongly appears that the 2-year moving average has turned into a resistance line.
It is certainly cool to use these types of indicators to predict the Bitcoin price, but unfortunately you cannot rely on them completely. There are too many different factors that play a role in the development of the Bitcoin price.
How about, for example, the interest rate decisions of the Federal Reserve, which seem to have dominated the market picture in recent times. In a period of 14 months, the US central bank raised interest rates by about 5 percent.
That interest rate campaign may not be over yet, so that will also play a role for the Bitcoin price. You can use on-chain analysis for your strategy, but relying entirely on it is not a good idea.