A Post-Gensler, Post-SBF Future
Present Probabilities and Soon-To-Be Footnotes
IN TODAY’S REPORT
What we cover: Bulls poised for multi-week victory. Potential 70-day closing high. Probabilities over all reliable data (2011-now) vs last 5 years. A post-Gensler, post-SBF future.
TODAY’S STATS
Poised To Recapture Territory
Amid rising bearish futures positions on the CME-listed cash-settled Bitcoin futures, Bitcoin collapsed to close over -7.0% lower on August 17th, almost entirely erasing the impressive gains from earlier in the summer. What’s the relevance? The August bear victory has held firm for weeks as bulls have been unable to take back the territory. That is, until today.
BITCOIN (BTC/USD). Daily Chart with Extreme High-Low Range Reading.
While Friday’s daily candle still needs to be completed before the bulls can exclaim victory, today we’ll look at the probabilities of Bitcoin’s potential close at a new 70-day high. To eliminate 70-day highs which also close at 52-week highs — something we’re not seeing currently — we’ll use a second condition to filter out such setups.
To take a closer look at the future implications of the current setup, we’ll run a simple test over Bitcoin’s reliable data history from 2011 to the present as well as another over more recent data. Our “query conditions” represent a basic definition of the technical state of BTCUSD. The simpler the conditions the more data points we get to consider (three conditions is our typical maximum).
First, our simple query conditions below:
BITCOIN SETUP CONDITIONS
CONDITION 1: Bitcoin closes at a 70-day high
CONDITION 2: Bitcoin does NOT close at a 365-day high
ENTRY AND EXIT CONDITIONS:
1. ENTRY CONDITION: Enter long ("buy") at the open of the next candle
2. EXIT CONDITION: Exit ("sell") N-days laterWhen we run our test over Bitcoin’s historical data, we get these results using a variety of hold times. For those new to our work, here’s a quick guide:
Win %: This shows the percentage of hypothetical trades which were profitable when exited “N-Days” later. For example, if someone bought Bitcoin each time all today’s query conditions were met in the past and exited 90 days later, Win % shows how many of those trades with have been profitable.
Average Trade %: Shows the average trade result for various hypothetical hold times (i.e., for a 7-day hold, 15-day hold, 30-day hold, 60-day hold, 90-day hold, 180-day hold, and a 365-day hold).
BITCOIN (BTC/USD). Average Trade Results. Last 5 Years vs. 2011 - Present.
At first glance, average trade results are positive across all hold times no matter the time window. All history 2011 to now? Last five years? No matter. Following 70-day closing highs which don’t close at new 52-week highs, results are positive over short-term and long-term timeframes alike.
Turning to percent profitable (i.e., “Win %”), hold times 90-days and beyond never fall below a 67% win rate irrespective of the time window. Shorter hold times from 15 days to 60 days show more variability.
BITCOIN (BTC/USD). Win % Results. Last 5 Years vs. 2011 - Present.
Bitcoin bulls now appear to be expressing their spot ETF approval bets with greater conviction, especially following Cointelegraph’s recent errant tweet (see Monday’s report) in which Bitcoin still locked a +4.95% gain even after the tweet was redacted. As we stated long ago, a spot Bitcoin ETF is an inevitability, and a growing number of traders clearly agree.
Virtually all serious traders and institutions alike want serious regulation and the subsequent clarity it brings. But serious regulation requires both serious legislators and a serious-minded regulator. The possibility of a post-Gensler market in which a spot Bitcoin ETF becomes a reality and Chair Gensler has only more legal losses to look forward to is an enticing one indeed.
Probabilities not only suggest higher prices from here, but the likelihood that in the not too distant future the terms “Gensler”, “FTX” and “SBF” will only be familiar to readers of footnotes. A post-Gensler, post-FTX, post-SBF future awaits us all.
peace_love_crypto-DB
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