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A Data-Driven Approach to Navigating All-Time Highs

Exclusive Research

  • The 2-Year Moving Average Multiplier highlights periods where buying or selling BTC would have generated outsized returns.
  • Price predictions of $100,000 BTC align closely with moving average estimates.
  • Spot volumes remain low as Q3 spot trading volume declined 42% over the quarter, dislocated from May highs of $3tn.
  • Google searches for ‘Bitcoin’ and ‘Buy Bitcoin’ are both 63% lower than in May.

Report

One of the most widely followed indicators by institutional investors is Philip Swift’s 2-Year Moving Average Multiplier. The indicator is easy to understand as it recommends buying Bitcoin when price drops below the 2yr MA (green line). Similarly, the indicator recommends selling Bitcoin when price goes above the 2yr MA x 5 (red line), as such instances have been historically effective for taking profit.

The market consensus remains $100,000 for BTC by end-of-year. This number aligns well with the current multiple expansion in the current cycle. As you can see in the chart, bitcoin sold off shortly after price went above the 2yr MA, with the next re-test of the 2yr-MA at $100,000 as both a key technical and psychological level. We recommend cautious optimism to $100,000 BTC, as there is no guarantee the move higher occurs by the end of the year.

From a return standpoint, seasonal strength favours bulls given the strong outperformance in Q4.

One reason we maintained conviction in BTC, with October approaching, was the low spot volumes throughout bitcoin’s recovery to $65,000. Now, the advent of a futures-based ETF creates arbitrage opportunities that entail buying bitcoin spot, further exacerbating bitcoin’s supply-shock.

The market is also in a healthier state in terms of leverage, volumes and speed of recovery in October. By all metrics, sellers have taken a breather. Interestingly enough, google searches for ‘Bitcoin’ and ‘Buy Bitcoin’ are both 63% lower than in May.

Conclusion
Navigating all-time highs is tough for any asset class. Luckily, indicators help traders predict price movements more accurately and give them a clearer picture as to what action buyers and sellers are likely to take next.

Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.

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