What Is the Bitcoin Bull Market Support Band?
The past few months have been a trying moment for holders and investors of Bitcoin, many people are already anxious about what the future holds for the price of this coin. In this article, we will extensively discuss what the bull market support band is and what it means.
Bull vs. Bear Market
As we have already explained and got to understand above what a bull market is, we have established that the bull market is a positive and strong increase in the prices of the market, which happens most often when investors are optimistic about the future performance of an asset. You may want to know what happens when these events do not happen. The bear market happens, it is important that you understand what the bear market is, to enable you to see a cutting difference between these two terminologies, as they are opposite of each other, it will also serve as a guide to you during different phases of Investments.
Now let us define and understand what the bear market is. A bear market takes place when investors are feeling pessimistic. Falling prices (bearish trend) create a negative market sentiment and as traders feel less confident, they tend to sell more and more, causing a further decrease in prices and often what is known as capitulation.
From these two explanations, we can now see the cutting difference between these two terminologies, while the bull is optimistic, a bear is pessimistic, and while the bull is a positive and strong increase in prices of the market, the bear is a negative and falling prices of the market.
The Bull Market and Support Band
The bull market shows a positive increase in the prices of the market, it shows a strong positive and meaningful performance in the market, these events happen in the cryptocurrency market and traditional markets as well. Although the term bull market can be used loosely to refer to any strong market activity, it is often utilized in traditional markets when the price of an asset rises 20% or more from its previous low point. Typically, a bull market arises when investors are optimistic about the future performance of an asset or the overall market index.
The bull market support band (b.m.s. band) has in previous years been a very good indicator in terms of indicating a shift in the market. When the price gets below the band, the price tends to get into a bear phase. And when the price breaks above and holds above the band, the price tends to start a new bullish trend.
The bull market support band is essentially our line in the sand for separating different types of market environments.
Bitcoin Bull Market Support Band
The bitcoin bull market support band can also be likened to the bear market Resistance band. The last time bitcoin tested this band was around the price of $45-46k in early April. Currently, we are in the bear market, and hoping to enter into an accumulation phase and then hit the bull market after some corrections. The bitcoin bull market support band is a moving average indicator, its significance comes from the previous bull runs where the price was bouncing off or rising from a distance to the support band until the end of the market cycle.
The green line represents the 20-week simple moving average and the red line represents the 20 weeks exponential moving average.
Bull Market Indicators
There are three key indicators that investors use to assess market conditions:
Price-to-earnings ratio (P/E)
One of the key indicators is the price-to-earnings (P/E) ratio. When the stock price to each dollar of earnings per share starts to rise, investors tend to start selling their shares because the earnings drop, and the P/E ratio rises. Monitoring the P/E helps investors make decisions on their investments.
Top-line growth of top-line revenue (TLR) refers to a business’s gross turnover or revenues. If a company is experiencing high turnover, it means the company has top-line growth. Furthermore, top-line growth should usually increase in line with the GDP and is, therefore, a good measure to reflect demand. Conversely, business top-line growth shows the investment potential for investors.
If businesses improve their profitability, it shows potential and encourages investors to buy their stocks, lured by a high return on investment. Usually, in a bull phase, several private companies choose to issue an initial public offering (IPO), driven by healthy economic conditions and high investor confidence. An overall bull market may encounter dips along the road, referred to as market corrections, but in general, the underlying price trend will continue to rise. A number of indicators might point to the fact that we are in a bull market, and thus the following market characteristics are more likely to be seen during a bull market.
Overall economic stability
Bull markets often coincide with a strong economy and optimistic market sentiment; investors have a more positive outlook when inflation keeps a steady pace. Therefore, the overall demand for stocks is also high. It can happen in line with strong gross domestic product (GDP) growth, as well as a drop in unemployment. However, usually, stock prices start rising before GDP growth, one of the key indicators to show how healthy the current economy is.
High investor confidence
A positive economic outlook and public sentiment drive up stock prices. If the overall economic situation is healthy, investor confidence coincides with it. As investors feel “bullish” about the market, they make bolder investments as investor confidence climbs in line with a bull market period.
High business profitability
A bull market is a reflection of the current economic and business environment. If an overall business climate improves, naturally, it raises more interest in investors. In a growing and healthy economy, companies tend to increase their bottom line and profitability. Therefore, more investors choose to buy. What is more, during positive economic growth, more private companies are likely to issue an initial public offering, and an increase in IPO activity would then further grow a bull market.
During a bull market, investors are more confident (bullish) to invest internationally. They get encouraged in a bullish market to expand their existing portfolio.
Summary of Bitcoin Bull Market Runs
When it comes to the past bull runs, you can notice that the price has risen and followed an upward trend after a Bitcoin halving. After the first halving, in 2012, the price insignificantly rose from $11 to $12. But, about a year later, the price increased to $1,075 in November. The subsequent halving in 2016 prompted one of the most notable bull runs in Bitcoin history as the price went from $576 to $650. Again, a year later, after a steady growth cycle, Bitcoin broke its first record and reached $17,000 in December.
The price decreased in 2018, but this is an important period for the cryptocurrency because it marks a time of low volatility and steady growth in 2019 when it reached $10,000 in June. Hence, the future predictions are extremely positive because the crypto market has matured, and more organizations are aware of the positive aspects of blockchain">blockchain technology and cryptocurrencies.
Should I buy Bitcoin?
Going through 15 years of the splendid epitome of innovation, we are probably still in the bear market, investors and traders in the cryptocurrency industry are optimistic about a bull run. Bitget offers a wide range of services, you can buy and also sell Bitcoin now at Bitget!
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Disclaimer: This article should not be taken as the basis for making investment decisions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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