Here’s something to note about Bitcoin . Behind all the noise of daily price swings, X-rated publications, and macro headlines, lies a remarkably simple indicator that has quietly evoked every major market low since 2015. Not once, but every time.
Much to the dismay of the bulls, it has yet to pull back, suggesting that the broader bear market may not be over, and the recent rebound from $65,000 to $75,000 may be a temporary rally.
The indicator
This involves two lines on the price table. There you go, no complex formula, an analysis of blockchain data is necessary.
These two lines represent the average price of Bitcoin over the last 50 and 100 weeks. They act as simple moving averages, showing short- and long-term trends in the price of Bitcoin.
Most of the time, the 50-week average is above the 100-week line. This is the natural state of markets that trend upward over time, as is the case with Bitcoin.
But sometimes, during periods of peak 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.
This has happened three times in the history of Bitcoin. Each time, it coincided with the end of a bear market, marking major price bottoms that have not been revisited since.
In other words, it is a contrary indicator, ironically marking troughs rather than deeper recessions.
Three times, three bottoms
Look at the vertical lines on the chart going back to 2015. They mark the three bearish crosses – April 2015, February 2019 and September 2022. Each occurred near the bottom phase, not precisely at the lowest point, but within the same range.
In 2015, BTC was considered a failed experiment. Then the crossover happened. BTC then rose from $200 to almost $20,000 in late 2017. A similar pattern occurred after the crossover in early 2019.
The crypto winter of 2022, characterized by several bankruptcies and scams, has broken investor confidence. The downward trend, however, petered out after the crossover in September. BTC bottomed out over the past few months and subsequently recorded a rise to $126,000 in October 20205.
Each of these increases has generated returns far superior to those of stocks and other major asset classes.
What does it say now?
As of April 17, the crossover has not occurred.
Bitcoin has declined sharply from its October high of over $126,000 to around $75,000, briefly reaching $60,000 in early February. As a result, the two averages are getting closer, but the 50-week average remains higher than the 100-week average.
The takeaway: If history is to be believed, the broader bear market may still be intact and could get worse before it finds a floor. This also means that the recent rebound towards $75,000 is likely a temporary rally rather than the start of a true bull market.
That said, historical models are just that – models – and they do not guarantee future results. If U.S. stocks, already at record highs, continue to advance, institutional demand for Bitcoin ETFs could strengthen, potentially supporting higher prices.
