Barring Evidence To The Contrary

Jul 24, 2023

IN TODAY’S REPORT

What we cover: Bitcoin looks poised to close at a 33-day low. Current conditions vs buy and hold.

TODAY’S STATS

Bitcoin Poised for 33-Day Low Ahead of FOMC

With the bears now in the short-term driver’s seat ahead of this week’s Fed decision, the recent battle for 31,000 suddenly looks more like an upcoming battle to hold 29,000. Wednesday’s FOMC rate announcement will see a 25 basis point hike and most likely bring the committee one step closer to issuing its final rate bump later in 2023. The tightening cycle ain’t over yet, but the end appears reasonably near.

Today we look at Bitcoin’s probable close at a 33-day low while holding above its 200-day moving (200ma). To establish a historical baseline, we’ll compare results to a simple buy and hold strategy — a great way to determine whether Bitcoin’s current conditions possess any edge and to what degree.

`BITCOIN (BTC/USD). Daily Chart with 200-Day Moving Average.`

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As usual, our test conditions are simple and describe what’s happening now for Bitcoin from a technical perspective.

QUERY SETUP CONDITIONS:

CONDITION 1: Bitcoin closes at a 33-day low
CONDITION 2: Bitcoin closes above its 200-day moving average (200ma)


ENTRY AND EXIT CONDITIONS:

1. ENTRY CONDITION: Enter long ("buy") at the open of the next daily candle
2. EXIT CONDITION: Exit ("sell") N-days later

The average trade comparison below reflects two different approaches:

Today’s Conditions: Buy Bitcoin when its closes at a 33-day low while above its 200ma, then sell “N days later”
Buy and Hold: Buy Bitcoin if it closes higher than 0.00000001, then sell “N days later”

Our goal is to see whether current conditions are bullish or bearish in an absolute sense, as well as how it stacks up relative to a simple “buy and hold” strategy.

`BITCOIN (BTC/USD). Average Trade Comparison, Current Conditions vs “Buy and Hold”`

Looking at hypothetical average trade results, expectations are positive across the board for both current conditions (i.e., 33-day lows > 200ma) and buy and hold. Naturally this is a positive, and further confirmation of a bullish expectation moving forward.

That said, it’s only over the intermediate-term time horizon — specifically 60 and 90-day hold times — that Bitcoin’s current conditions outperform a simple buy and hold, with its +54.2% hypothetical gain over a 60-day hold time beating buy and hold’s +31.4% gain, and its +155.6% hypothetical gain over a 90-day hold time beating buy and hold’s +84.2%.

Today’s setup for Bitcoin may not offer an edge over buy and hold, but the outlook nevertheless remains bright. Barring evidence to the contrary, we’ll HODL strong.

THE TLDR

A Few Key Takeaways

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✔ The recent battle for 31,000 suddenly looks more like an upcoming battle to hold 29,000
✔ It’s only over the intermediate-term time horizon — specifically 60 and 90-day hold times — that Bitcoin’s current conditions outperform a simple buy and hold
✔ Barring evidence to the contrary, we’ll HODL strong.

peace_love_crypto

-DB

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