Bitcoin: The Bullish "Death Cross"
Bitcoin's "Death Cross" Occurrences Tilt Bullish Despite The Myth
IN TODAY’S REPORT
What we cover: Bitcoin’s recent “death cross” signal dissected. Hypothetical trades with a 90-day hold.
TODAY’S STATS
Dissecting the Death Cross
As last week’s Permissionless 2 conference got under way, Bitcoin sold off in early Monday trading, ending the day down -2.62%. While the number doesn’t sound all that bad, it felt worse. One newbie conference friend even texted me during Erik Voorhees brilliant opening remarks: “Did you see Bitcoin tanked?”
The next day Bitcoin experienced its 10th so-called “Death Cross” since 2011 as the king crypto rallied back in defiance. The Death Cross signal — when the 50-day simple moving average crosses under the 200-day simple moving average — holds an obvious bearish connotation for traders.
But does this apply to Bitcoin? Are we about to unravel?
BITCOIN (BTC/USD). Daily Chart with 50ma and 200ma.
To take a closer look at the future implications of the current Death Cross setup, we’ll run a simple test over Bitcoin’s (reliable) data from 2011 to the present. Our “query conditions” represent a basic definition of the technical state of BTCUSD.
First, our simple query conditions below:
//QUERY CONDITIONS//
CONDITION 1: Bitcoin's 50ma crosses below its 200ma on a closing basis
//ENTRY AND EXIT CONDITIONS//
1. ENTRY CONDITION: Enter long ("buy") at the open of the next candle
2. EXIT CONDITION: Exit ("sell") 90-days laterBelow are the hypothetical trade results for every time we’ve seen a Death Cross in BTCUSD’s history from 2011 on, using a 90-day exit. In other words, we’re buying the Death Cross signal and exiting 90 days later.
BITCOIN (BTC/USD). “Death Cross” Trades History with a 90-Day Hold Time. 2011-Now.
The results are spread fairly evenly throughout the years, with five losses and four wins. While the winning percentage leans slightly bearish at only 44.4% profitable, it’s the magnitude of the results that matters here.
Best Result: +87.35%
Worst Result: -23.17%
Average Result: +14.75%
The three bear market signals (2014, 2018, and 2022) ended as losses
The best result occurred in a year preceding the 2016 halving (similar to now)
The upshot? Death Crosses in Bitcoin have tilted bullish in outcome, with an average trade of +14.75% over 90 days. Should a similar scenario play out following the current signal, we’d be looking at Bitcoin at 29,653 by mid-December.
While this may not excite traders desperate to see Bitcoin back above 30,000, consider the possibility of a winning outcome, which is arguably close to a 50/50 proposition. With an average losing trade of only -13.72% and an average winning trade of +50.34%, a positive outcome could potentially be reason to celebrate.
Anyone ready for Bitcoin 38,850? We’ll cautiously say… bring it. LFG.
HEY THERE! THANKS FOR READING. Please feel free to *SHARE* this report! We appreciate you spreading the word so we can continue to deliver this research. Cheers, DB
peace_love_crypto-DB
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