Adam Back Ties Bitcoin's Rising 200-Week Moving Average To A Charlie Munger Investing Rule

• Bitcoin’s 200-week moving average crossed $61,000, tying it to a Charlie Munger maxim about buying quality assets at the 200WMA to beat the market, Adam Back said.
• He noted the irony that Munger and Buffett are well-known Bitcoin skeptics who also failed to see the early internet, liking “brick and mortar things.”
• An analyst pointed out that BTC is down 41% from its October high and sees a real floor of $78,000 to $84,000.

Blockstream CEO and long-time cypherpunk, Dr. Adam Back, said on Sunday that Bitcoin’s (BTC) 200-week moving average (200WMA) has surged above the $61,000 mark, and linked the milestone to Charlie Munger's investing principle.

Back cited a maxim attributed to Munger that an investor who only ever bought high-quality stocks at the 200-week moving average would beat the S&P 500 by a wide margin over time, though few have the discipline to do it. Back extended the reasoning to Bitcoin, with the rising 200WMA serving as a structural floor that has followed the asset’s long-term growth in the past.

Back, in a follow-up post, acknowledged the irony of the comparison that Munger and the former CEO of Berkshire Hathaway (BRK.A/BRK.B), Warren Buffett, had been famously known to disbelieve in Bitcoin. Back also stated that the famous investors did not embrace the early internet, calling them skeptics of new technology who only “liked brick and mortar things.”

Why Bitcoin’s 200WMA Matters

A rising 200WMA is generally viewed as a sign of a long-term upward trend in Bitcoin, even amid sharp drawdowns. The 200-week moving average removes Bitcoin’s price over 200 weeks, or roughly four years, which is the length of a full market cycle. 

It is viewed by analysts like PlanB as a long-term support indicator, with Bitcoin’s spot price having fallen to or near the 200WMA before reversing in previous bear markets, thus making the metric a point of reference for cycle bottoms. 

The Bearish Counterpoint

However, Back's optimism contrasts with a much more bearish near-term backdrop. On Friday, an analyst who goes by the name crypto_birb noted that Bitcoin is now down about 41% from its October high of $126,000 and is approaching its 30th consecutive week below the 50-week trend, a pattern the analyst compared, via Dow Theory, to a shift from “Distribution to Panic.” “Every rally since the top has been a lower high,” the analyst said.

Bear-market bottoms have historically printed 30% to 40% above the eventual cycle low, the analyst said, adding that the $60,000 level in February was unlikely to be the bottom, with a true floor in the $78,000-$84,000 range relative to recent action. A rejected bull breakout also added to the caution, he said. “I'd have troubles sleeping at night with longs open,” the analyst said.

Previously, a poll by PlanB on Bitcoin’s bear market bottom showed that 51.1% voted that the $60,000 mark was the bottom low, while 48.9% believed the apex cryptocurrency’s price could go further down. 

Bitcoin’s price was last trading around $73,784, down over 4% on the week. On Stocktwits, retail sentiment around BTC remained in the ‘extremely bearish’ zone, while chatter stayed at ‘normal’ levels over the past day. 

Read also: Bitcoin 'Doesn't Move Anymore,' Says Scaramucci, But He 'Liked' BlackRock's Dark Pool Trade

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