The Bitcoin Trend Index is a signal released daily that displays the direction and weight of Bitcoin’s price trends through a purpose-built multi-variable algorithm.
The algorithm processes data and generates one of five possible states, each of which represents a particular direction and strength of bitcoin’s price trend, these values range from significant uptrend. It’s generated from historical data gathered from CoinDesk Bitcoin Price Index.
“We are excited to offer the Bitcoin Trend Indicator, which has been rigorously researched and constructed,” Andy Baehr, CFA, managing director at CoinDesk Indices, said in a press release. “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 BTI algorithm has been rigorously backtested over a period of five years on old XBX data which would indicate how accurate the algorithm really is at predicting price trends.
BTI has been designed for use by asset managers and investors for long-only dynamic allocation strategies. By comparing short-term price averages to their long-term counterparts, BTI’s algorithm identifies trends by employing the widely-used technique of moving average crossovers.
According to CoinDesk Indices, a hypothetical BTI-directed portfolio of bitcoin and cash exhibited reduced exposure to cryptocurrency market downturns – less “crypto winter” – while still capturing market upswings.
BTI is a component of the portfolio of CoinDesk Indices, along with the Digital Asset Classification Standard (DACS) and the CoinDesk Market Index (CMI).