dbthequant
Many traders and technicians closely follow the well-known “Golden Cross” moving average crossover in key liquid markets such as Bitcoin, Gold, and the Nasdaq 100 Index among others. Today, however, we’ll examine an under-the-radar Bitcoin moving average crossover which looks imminent. Using Bitcoin’s reliable data from 2011 through today, let’s find out if this lesser known moving average crossover looks bullish or bearish going forward.
This Lesser Known Moving Average Crossover May Soon Hit
While the Golden Cross occurs when the 50-day simple moving average crosses above the 200-day simple moving average, Bitcoin’s 50-day simple moving average (50MA) currently looks poised to cross above its 100-day simple moving average (100MA) within days. Earlier this year, Bitcoin’s 50MA crossed above its 100MA as the number one crypto by market cap surged in January off of its post-FTX collapse low. Further Bitcoin gains followed from this most recent crossover.
Bitcoin Daily Chart | BTCUSD on TradingView.com
Now that Bitcoin has extended its year-to-date gains in recent sessions, its 50MA looks poised to cross back above its 100MA once again. Beyond the signal earlier this year, what’s happened in the past when Bitcoin’s 50MA has crossed above its 100MA?
Sixty Days And Beyond Looks Bullish
To find out, we’ll look at all signals since 2011, adding an extra condition which better describes current market conditions with respect to Bitcoin. Our extra condition requires that Bitcoin’s 100MA must be rising, meaning that the average closed at a value greater than the day before when the 50MA crossed above the 100MA. This additional requirement filters out 50MA > 100MA crossovers during periods of downward price momentum and better describes Bitcoin’s current technical state.
While the holding time graphic below illustrates Bitcoin’s historical tendency for further upside following such signals, hypothetical gains appear unimpressively small with short-term holding times of seven to fifteen days, up only +1.8% and 1.9% respectively. Moving out to a 30-day holding time, the Average Trade of +10.4% looks far more promising.
Bitcoin Holding Time Stats | SOURCE: Tableau
From an intermediate-term perspective, however, the Average Trade stats jump significantly higher with hypothetical gains ranging from +45.7% with a 60-day holding time to +170.9% with a 90-day hold.
Returning to the early 2023 signal and assuming a 90-day hold (1/25/23 to 4/25/23), Bitcoin’s recent 50MA >100MA crossover gained a respectable +22.7%. While it’s clearly below the Average Trade value for the full history of these crossover signals, Bitcoin may be poised for potentially higher prices if it’s 50MA can once again close above its rising 100MA.
DB the Quant is the author of the REKTelligence Report newsletter on Substack. Follow @REKTelligence on Twitter for evidence-based crypto market research and analysis. Important Note: This content is strictly educational in nature and should not be considered investment advice. Featured images created with Tableau. Charts from TradingView.com.
