A Simple Bitcoin Indicator Has Successfully Signaled Every Bear Market Bottom Since 2015, But Remains Inactive

Notably, beneath the daily price fluctuations and macroeconomic headlines, a straightforward indicator has consistently signaled major market bottoms for bitcoin since 2015. This indicator, which involves the intersection of two moving averages, has not yet been triggered, implying that the broader bear market may not be over and the recent price surge to $75,000 could be a temporary reprieve. The indicator in question is based on bitcoin's average price over the past 50 and 100 weeks, acting as a simple moving average that reflects near-term and long-term trends in the cryptocurrency's price. Typically, the 50-week average exceeds the 100-week average, but during periods of extreme fear and relentless selling, the 50-week average dips 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 significant price bottoms that have not been revisited. Essentially, it has served as a contrary indicator, signaling bottoms rather than further downturns. The three bearish crossovers, which occurred in April 2015, February 2019, and September 2022, all took place near the bottoming phase, although not exactly at the lowest point. Following each crossover, bitcoin experienced substantial rallies, with returns surpassing those of equities and other major asset classes. As of April 17, the crossover has not occurred, with bitcoin's decline from its October record high to around $75,000 bringing the two averages closer together, yet the 50-week average remains above the 100-week average. This suggests that, based on historical patterns, the bear market may still be intact and could worsen before reaching a bottom, making the recent price bounce toward $75,000 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 factors such as the advancement of U.S. equities and institutional demand for Bitcoin ETFs could potentially support a price rally.