What Weakness? Odds Say Higher In 90 Days
Bitcoin's Technicals & History Suggest Higher Prices
IN TODAY’S REPORT
What we cover: STATS EDITION. Bitcoin’s recent 30-day gain & average trade. 2016 to now. 63,618 by March? Closing thoughts.
TODAY’S STATS
Bitcoin’s +25% Gain In Just 30 Days
After weeks of consistent and welcome upside, the crypto market finally ran into a wall of sell pressure Sunday night as Bitcoin, Ether, and Alts all declined significantly.
But as always, context is key. Looking through the lens of Bitcoin, the king crypto just recently vaulted over +25% in a mere 30 days as it closed at another 52-week high. With this in mind, let’s take a look at what’s happened next following similar past surges.
BITCOIN (BTC/USD). Daily Chart with Today’s Conditions.
First, to take a closer look at the future implications of the current setup, we need to run a simple test over all of Bitcoin’s reliable history from 2011 to the present. 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). Our third condition today involves the REKTelligence Stretch % indicator which measures the percentage distance of an asset above or below its 20-day simple moving average (20sma).
First, our simple query conditions with a 90-day hold:
BITCOIN SETUP CONDITIONS
CONDITION 1: Bitcoin gains >= +25%
CONDITION 2: Bitcoin's gains occur within 30 days or less
CONDITION 3: Bitcoin closes >= 15% above its 20-day SMA
ENTRY AND EXIT CONDITIONS:
1. ENTRY CONDITION: Enter long ("buy") at the open of the next candle
2. EXIT CONDITION: Exit ("sell") 90-days laterWith traditional markets in mind, this setup appears arguably extraordinary at first, a rare technical event which should have just a handful of data points.
This would be a mistake, however. Since 2011, Bitcoin has experienced these conditions 25 times, or roughly two times per year on average — hardly a rare event. On the chart below, all hypothetical trades since inception are shown with a 90-day hold time.
BITCOIN (BTC/USD). Today’s Conditions: All Trades w/ 90-day Hold. 2011-Now.
While the largest gains occurred between 2011 and 2014, so did the largest loss of -52.79% in March 2014. With an impressive winning percentage of 76%, the average trade is +134.23% for this setup just 90 days later.
For a more recent look, we’ll examine 2016 to the present below.
BITCOIN (BTC/USD). Today’s Conditions: All Trades w/ 90-day Hold. 2016-Now.
With only a single loss in nearly eight years, these conditions have an impressive winning percentage of +92.3% (1 loss in 13 occurrences) — an improvement over the full history.
In fact, only three of the past wins gained under 10%, with the other nine gaining between +10.25% and +136.94%. All hypothetical trades considered, Bitcoin’s average trade is +44.3% from 2016 to now.
From the recent close of 44,008, a trade matching the average result from 2016 to now would put Bitcoin at 63,618 by early March — spitting distance from the all-time high.
Obviously we don’t expect to see Bitcoin log its own average result to the last satoshi. But the odds do say higher, and today’s weakness may just present the experienced trader with a compelling opportunity.
peace_love_crypto-DB
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