Bitcoin briefly dipped below its 200-week moving average twice over the past two weeks, a rare occurrence that Kraken says has historically coincided with attractive long-term entry points for investors.
Bitcoin (BTC), recently trading near $62,708, has been testing a level that has often preceded strong bullish phases, Kraken Chief Economist Thomas Perfumo told CoinDesk.
That level is the 200-week simple moving average (SMA), a long-term indicator that tracks Bitcoin’s average price over roughly four years, helping smooth out short-term volatility and highlight the broader trend.
Over the past two weeks, BTC briefly slipped below this level on two occasions before recovering above it by weekly closes. At the time of writing, Bitcoin was around $63,900, slightly above the 200-week SMA at $62,358.
Perfumo noted that weekly closes below this threshold are uncommon, occurring on roughly 10% of trading days since 2017, and have historically aligned with periods of strong long-term performance for buyers.
He added that “buyers at this level have historically seen median returns above 113% over one year and around 313% over two years.”
The median measure represents the midpoint of all outcomes, meaning half of historical returns were higher and half were lower, providing a more robust view than averages that can be skewed by extreme outliers.
Past data also suggests relatively limited downside risk for investors who enter at these levels.
Perfumo said buyers accumulating below the 200-week SMA have typically reached break-even within just two days on a median basis, with maximum drawdowns over the following year averaging about 9%.
He cautioned, however, that historical performance does not guarantee future results, even though prior cycles suggest Bitcoin has often offered strong value when trading near this long-term trend indicator.
