CoinDesk Indices (CDI), a subsidiary of CoinDesk and the leading provider of digital asset indices by AUM since 2014, today announced the launch of the Bitcoin Trend Indicator (BTI).
The BTI is a daily signal which conveys the presence, direction and strength of the trend in the price of bitcoin using a purpose-built, non-discretionary algorithm.
The signal broadcasts one of five possible values, each corresponding to an indicated direction and strength of trend in the price of bitcoin. The BTI is calculated daily, and is derived from historical daily levels of the CoinDesk Bitcoin Price Index (XBX), using a non-discretionary methodology. It has been backtested over a five-year historical period using XBX data.
"We are excited to offer the Bitcoin Trend Indicator, which has been rigorously researched and constructed," said Andy Baehr, CFA, Managing Director at CoinDesk Indices. "We designed the BTI to help identify trends in the price of bitcoin, assisting asset managers to create new dynamic products, and helping investors make better-informed allocation decisions over a long-term horizon."
Asset managers and investors can utilize the BTI for long-only dynamic allocation strategies. The BTI's research-driven construction uses a widely utilized technique known as moving average crossovers to identify trends. This technique compares recent short-term price averages to recent long-term price averages. The BTI is designed to be implemented in systematic strategies that allocate between bitcoin and a risk-free asset. These strategies can help investors navigate long-term bitcoin drawdowns, reducing potential risks. CDI has observed that a hypothetical portfolio of bitcoin and risk-free cash informed by the BTI has reduced exposure during "crypto winters" while still participating in price uptrends.