Grayscale's Insight on Crypto Investment: Trend > HODLing

We all know how vital it is to stay updated with market trends, especially in the crypto space. Grayscale, one of the big players in the Bitcoin investment scene, recently shared some insight about this, here are the main takeaways.

For example, Bitcoin's price has always been a rollercoaster, but Grayscale's brings out an interesting point: "Profits tend to follow profits, and losses follow losses." This idea of "momentum" suggests that if Bitcoin's been on a roll, it's probably going to keep that energy going, and if it's been down, well... you get the picture. Historical data backs this up, showing that most of Bitcoin's gains happened when the previous months were also in the green.

Source: Grayscale

Now, for those of us who love a bit of technical analysis, Grayscale threw in a tidbit about the magic of moving averages. By following a strategy based on a 50-day moving average since 2012, not only could you have seen higher annualized returns, but you'd also have faced less of that heart-stopping volatility compared to just HODLing. Basically, if the 50-day average is negative, sell; if the 50-day average is positive, buy.

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The 50-day moving average is a good momentum indicator. Source: Bloomberg

But here's something to keep in mind: while momentum trading sounds cool, not because it has worked the past 10 years it means it will continue to do so. Past performance is not indicative of future results.

Grayscale's insights are a fresh perspective, but always remember to do your own research. Trading fees, market news, and our own risk tolerance play a huge role. So, what's your take?