A Simple Indicator Has Successfully Predicted Every Bitcoin Bear Market Bottom Since 2015, But It Has Yet to Signal

One notable aspect of bitcoin, currently priced at $75,426.87, is the presence of a surprisingly straightforward indicator that has consistently signaled major market bottoms since 2015. Despite its simplicity, consisting of just two lines on the price chart representing the 50-week and 100-week moving averages, it has proven remarkably effective. The indicator's lack of signal thus far implies that the broader bear market may not be over, and the recent price surge to $75,000 from $65,000 could be a short-term recovery. The two lines on the chart signify the average price of bitcoin over the past 50 and 100 weeks, acting as simple moving averages that illustrate near-term and long-term trends in the cryptocurrency's price. Typically, the 50-week average exceeds the 100-week average, reflecting the natural state of markets that trend upward over time, as is the case with bitcoin. However, during periods of intense fear and relentless selling, the 50-week average occasionally falls below the 100-week average, resulting in a bear market signal. This crossover has occurred three times in bitcoin's history, each time coinciding with the end of a bear market and marking a major price bottom that has not been revisited since. Essentially, it has served as a contrary indicator, paradoxically signaling bottoms rather than further downturns. The vertical lines on the chart, dating back to 2015, denote the three bearish crossovers that occurred in April 2015, February 2019, and September 2022. Each crossover took place near the bottoming phase, although not precisely at the lowest point, but within the same range. In 2015, for instance, bitcoin was deemed a failed experiment before the crossover happened, after which it 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, marked by several bankruptcies and scams that shattered investor confidence, saw the downtrend lose momentum after the crossover in September, with bitcoin eventually bottoming out in the final months and later surging to $126,000 by October 2020. Each of these bull runs yielded returns that far exceeded those of equities and other major asset classes. As of April 17, the crossover has not occurred, with bitcoin having declined 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, if history serves as a guide, the broader bear market may still be intact and could worsen before finding a bottom. It also suggests that the recent bounce toward $75,000 is likely a temporary recovery rather than the start of a full-fledged bull market. Nevertheless, historical patterns are merely that – patterns – and do not guarantee future outcomes. If U.S. equities, already at record highs, continue to advance, institutional demand for Bitcoin ETFs could strengthen, potentially supporting a price rally.