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Bitcoin closes above 200D dma, triggering rule #3. Constructive outlook for crypto but pullbacks always happen

April 30, 2020
Bitcoin closes above 200D dma, triggering rule #3.  Constructive outlook for crypto but pullbacks always happen

Bitcoin closed above its 200-day moving average (dma) yesterday, triggering Rule #3 from our top 10 crypto rules.  The implication is that Rule #3 is saying risk/reward for Bitcoin is favorable as Bitcoin sees a higher 6M win-rate when it moves above its 200dma (80% win-rate vs 36% below its 200dma).

We already have a confluence of positive tailwinds for Bitcoin in 2020, so this triggering of Rule #3 will be useful if Bitcoin pulls back in any meaningful way in the coming weeks.  In fact, Rob Sluymer, Head of Technical Strategy, believes Bitcoin is due for a pullback as the daily RSI is way overbought.

But in the next month, we approach the block reward halvening, which is another positive dynamic for supply/demand.

Our takeaway? Bitcoin is up 22% YTD, making it the best performing asset in 2020, after tripling in 2019 (best performing asset in 2019).

And typical 6M forward returns is 193% after Bitcoin crosses above its 200dma.  This is based on 10-yrs of history but the more recent 200dma crosses have been more mixed.  Last year, the 200dma failed after Congress came after Facebook's Libra. If crypto doesn't face regulatory/Congressional backlash, there are better odds for a positive outcome.
The first 5 of 10 rules of Bitcoin....

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