Evidence for Momentum
Bitcoin's Stats Suggest Momentum Likely To Continue
IN TODAY’S REPORT
What we cover: STATS EDITION. Bitcoin stats when its closes at a new 365-day high while stretched above its 20ma. Momentum begets more momentum.
TODAY’S STATS
On The Doorstep
With Bitcoin on the doorstep of $100,000, traders, podcasts and financial journalists now ask whether we’ll soon see six figure Bitcoin or rather a pullback following Bitcoin’s impressive post-election surge.
Will the king crypto be able to conquer this level? What’s the expectation over the next month — continued momentum or well-deserved correction?
Today I’ll look at this question by defining Bitcoin’s current technical setup and asking history to weigh in.
First, the daily chart below shows Bitcoin’s REKTelligence Stretch % indicator stretched to +20% above its 20-day moving average right as it once again hits a new one-year high.
BITCOIN (BTC/USD). Bitcoin hits a new 365-day high while stretched above its 20ma.
By defining its recent technical setup with two conditions and employing a 30-day holding time, we can see that this is hardly a rare occurrence across the years.
BITCOIN (BTC/USD). Bitcoin Hypothetical Trades. Exclude outlier. 2011-Now.
BITCOIN SETUP CONDITIONS (2011 - Now)
CONDITION 1: Bitcoin closes at a new 365-day high
CONDITION 2: Bitcoin is stretched >= +20% above its 20-day moving average
EXIT CONDITION
Sell 30 days later
OBSERVATIONS
*Even excluding the early outlier of over +530.7% (May 2011), the average gain using a 30-day hold sits just north of 60% - very impressive
*While robust, recent bull cycle gains were more muted than during Bitcoin's early history
*Most striking is that while gains range from modest to exceptional, losses are minimal and quite small in comparisonNow let’s take a look at more recent history, exlcuding anything before 2016.
BITCOIN (BTC/USD). Bitcoin Hypothetical Trades. Exclude outlier. 2016-Now.
BITCOIN SETUP CONDITIONS (2016 - Now)
CONDITION 1: Bitcoin closes at a new 365-day high
CONDITION 2: Bitcoin is stretched >= +20% above its 20-day moving average
EXIT CONDITION
Sell 30 days later
OBSERVATIONS
*While early 2016 saw this setup a few times and resulted in small losses (-1.53%, - 0.88%, and -10.06%), all other trades since have been positive
*Obviously more recent years have produced a lower average trade at +23.4% using a 30-day hold time
*The edge has nevertheless been consistently strong across Bitcoin's historyWhile these stats look strong — albeit nuanced — across the years, Bitcoin’s current narrative is also the most compelling I’ve ever witnessed since my first encounter with this revolutionary asset in 2014.
$100,000 Bitcoin? Stats say that the probability is high. And soon.
Until next time…
peace_love_crypto-DB
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