- The indicator has five values corresponding to the strength or direction of trend in the price of Bitcoin
- The BTI can be used by investors and asset managers to craft long-term allocation strategies
CoinDesk Indices (CDI), a leading digital asset provider by AUM for almost a decade and a subsidiary of crypto news outlet CoinDesk, has introduced the Bitcoin Trend Indicator (BTI), Bankless Times learned from a press release.
The BTI issues signals daily, conveying the strength and direction of any trend in Bitcoin’s price using a targeted algorithm.
Five values correspond to a strength or direction of trend
The indicator has five different values corresponding to the strength or direction of trend in the price of the flagship crypto. The indicator is calculated daily based on historical daily levels of the CoinDesk Bitcoin Price Index (XBX) using a non-discretionary methodology.
XBX data was used to back-test it over a five-year historical period. Managing Director at CoinDesk Indices Andy Baehr commented:
We are excited to offer the Bitcoin Trend Indicator, which has been rigorously researched and constructed. 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.
The varied uses of BTI
The BTI can be used by investors and asset managers to craft long-term, dynamic allocation strategies. Its research-driven structure employs a very popular technique to identify trends, known as moving average crossovers.
The approach works by comparing recent short-term and recent long-term price averages. The indicator was intended to be part of systematic strategies that allocate between a risk-free asset and Bitcoin.
Helping traders deal with drawdowns and reduce risk
These strategies help traders reduce the risk of long-term Bitcoin drawdowns. CDI noted that a hypothetical portfolio of risk-free cash and Bitcoin using the BTI for guidance may have more limited exposure during crypto bear markets while still benefiting from price upticks.
CDI boasts a rich experience base, including institutional-grade research, structuring, and indexing, helping the digital asset economy progress through innovation.
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