Here is something worth noting about bitcoin . Beneath all the noise of daily price swings, X-posts and macro headlines, there is a remarkably simple indicator that has quietly called every major market bottom since 2015. Not once, but every single time.
To the dismay of the bulls, it hasn’t shot yet, suggesting that the broader bear market may not be over and the recent rise to $75,000 from $65,000 could be a temporary rebound.
The indicator
It involves two lines on the price chart. That’s it, no complex formula, analysis of blockchain data is needed.
These two lines represent bitcoin’s average price over the past 50 and 100 weeks. They act as simple moving averages that show short-term and long-term trends in bitcoin’s price.
Most of the time, the 50-week moving average is above the 100-week mark. This is the natural state of markets that trend upwards over time, as is the case with bitcoin.
But occasionally, during periods of high fear, when selling is relentless and sentiment has collapsed, the 50-week average falls below the 100-week average. This crossover is known as a bear market signal.
It has happened three times in bitcoin’s history. Each time it has coincided with the end of a bear market, marking major price lows that have not been revisited since.
In other words, it has been a contrarian indicator, ironically marking bottoms rather than deeper downturns.
Three times, three bottoms
Look at the vertical lines on the chart going back to 2015. These mark the three bearish crossovers – April 2015, February 2019 and September 2022. Each one occurred near the bottom phase, not exactly at the lowest point, but within the same range.
In 2015, BTC was written off as a failed experiment. Then the crossover happened. BTC subsequently rose from $200 to nearly $20,000 by the end of 2017. A similar pattern played out after the early crossover in 2019.
The 2022 crypto winter, marked by numerous bankruptcies and scams, shattered investor confidence. However, the downtrend ran out of steam after the crossover happened in September. BTC bottomed out in recent months and later rallied to $126,000 in October 20205.
Each of these bull runs delivered returns that far exceeded those of stocks and other major asset classes.
What does it say now?
On April 17, the crossover has not happened.
Bitcoin has fallen sharply from its October high of over $126,000 to around $75,000 and briefly touched $60,000 in early February. As a result, the two averages are moving closer together, but the 50-week average is still holding above the 100-week average.
Takeaway: If history is any guide, the broader bear market may still be intact and may worsen before bottoming out. It also means that the recent bounce towards $75,000 is likely to be a temporary rebound rather than the start of a full-fledged bull market.
That said, historical patterns are just that – patterns – and they do not guarantee future results. If US stocks, already at record highs, continue to rise, institutional demand for Bitcoin ETFs could strengthen, potentially supporting a price rally.
