A Simple Yet Powerful Indicator Has Successfully Identified Every Market Bottom Since 2015, But Remains Inactive

Notably, beneath the daily price fluctuations and macroeconomic headlines, a straightforward indicator has consistently identified major market bottoms since 2015. To the disappointment of bulls, this signal has not been triggered yet, implying that the broader bear market may not have ended and the recent recovery to $75,000 from $65,000 could be temporary. The indicator in question involves two lines on the price chart, representing Bitcoin's average price over the past 50 and 100 weeks, acting as simple moving averages that illustrate near-term and long-term trends. Typically, the 50-week average is above the 100-week line, but during periods of extreme fear and relentless selling, the 50-week average falls below the 100-week average, marking a bear market signal. This crossover has occurred three times in Bitcoin's history, coinciding with the end of bear markets and marking significant price bottoms that have not been revisited. In essence, it has served as a contrary indicator, signaling bottoms rather than deeper downturns. Examining the chart from 2015, the vertical lines denote the three bearish crossovers – April 2015, February 2019, and September 2022 – each occurring near the bottoming phase. Following the 2015 crossover, BTC rallied from $200 to nearly $20,000 by the end of 2017. A similar pattern emerged after the early 2019 crossover. The 2022 crypto winter was marked by bankruptcies and scams, shattering investor confidence, but the downtrend lost momentum after the crossover in September, with BTC later rallying to $126,000 by October 2020. Each of these bull runs delivered returns that far exceeded those of equities and other major asset classes. As of April 17, the crossover has not occurred, with Bitcoin declining sharply from its October record high of over $126,000 to around $75,000, briefly reaching $60,000 in early February. Consequently, the two averages are moving closer together, but the 50-week average remains above the 100-week average. The implication is that, based on historical patterns, the broader bear market may still be intact and could worsen before finding a bottom, and the recent bounce toward $75,000 is likely a temporary recovery rather than the start of a full-fledged bull market. However, it is essential to note that historical patterns do not guarantee future outcomes, and if U.S. equities continue to advance, institutional demand for Bitcoin ETFs could strengthen, potentially supporting a price rally.