50% of people who buy Bitcoin under 62,358 USD can double their profit after a year

Recently, Bitcoin (BTC) has continuously fluctuated around a price level that is considered attractive for long-term buying, bringing high profits, according to Mr. Thomas Perfumo, Chief Economist of the Kraken cryptocurrency exchange.

This threshold is the 200-week Simple Moving Average (SMA), which reflects the average price of Bitcoin over the most recent 200 weeks. This indicator helps investors identify long-term trends of the market, while reducing the impact of short-term price fluctuations. BTC’s current 200-week SMA is set at $62,358.

In the past two weeks, Bitcoin fell below the 200-week SMA twice but quickly recovered and closed the week above this threshold. This morning, BTC traded below 63,000 USD per unit, down about 2.4% compared to yesterday. However, the market price has improved more than 5% compared to the time it breached the important psychological mark of 60,000 USD 2 weeks ago.

According to Mr. Perfumo, this is a notable signal because since mid-2017, Bitcoin has only closed below the 200-week SMA in about 10% of trading sessions. Experts say these times are often attractive buying opportunities.

“Historically, investors who buy Bitcoin below the 200-week SMA have averaged returns of over 113% after one year and about 313% after two years,” Mr. Perfumo said.

He also explained that the median return is the profit level in the middle if you rank all investments that have bought Bitcoin below the 200-week SMA from low to high. That means half of the investments achieved 113% higher returns, while the other half achieved lower returns. This index is different from average return because it is not “distorted” by a few cases of excessively large returns.

Not only does it bring high profits, buying Bitcoin below the 200-week SMA also shows that the risk of holding is relatively low. The exchange’s research shows that buyers who accumulate below the 200-week SMA have a median time to breakeven of just 2 days, while the median deepest drawdown over the following year is only about 9%.

However, he also noted that past performance does not guarantee future results. However, historical data shows that at this price range, Bitcoin often brings attractive value to long-term investors.

BTC is falling in price as the US Federal Reserve (Fed) kept interest rates unchanged at 3.5-3.75%, as expected, but updated its outlook with higher inflation and a slower pace of rate cuts. Some Fed officials even left open the possibility of continuing to raise interest rates if necessary. This was the first meeting under new President Kevin Warsh. The Fed’s more hawkish stance means financial conditions will tighten, reducing liquidity – a factor that is often detrimental to risky assets like cryptocurrencies.

Experts say that BTC will likely continue to move sideways until a new catalyst appears. “We expect Bitcoin to fluctuate in the $60,000-70,000 range in the next few weeks if there is no event big enough to change the trend,” said Gerry O’Shea, Director of Global Market Research at Hashdex.

However, the current price movement is considered a phase of accumulation (consolidation) rather than panic selling (capitulation). Bitcoin still maintains the price range around $63,000-64,000, suggesting that selling pressure may have weakened. However, buyers are still cautious as the Fed’s tougher monetary policy is limiting the room for price increases.