When it comes to trading the market, there are many different indicators that traders use to perform technical analysis. You have indicators such as:

  • NUPL (Net Unrealized Profit/Loss)
  • Fibonacci Retracement
  • Relative Strength Index (RSI)
  • Moving Averages (MA)
  • Moving Average Convergence/Divergence
  • And many more…..

Yes, traders have a Batman’s utility belt worth of tools and indicators at their disposal. However, there is one indicator that is as unconventional as it is interesting. It is hardly ever spoken about, and most traders view it as pseudo knowledge or just plain superstition. If you’re wondering what indicator I’m referring to, it would be lunar cycles (crazy I know). There are traders that have found patterns in the cycles of the moon that correlates with the price movement of Bitcoin.

As ironic as that sounds, – being that a common saying within crypto is that we’re going to the moon – I’ve done my research, and there may actually be something to these patterns. Trading based on lunar cycles has actually been around for quite some time. More adventurous traders have been using lunar cycles to trade stocks for quite some time. However, it’s more commonly used (which is still very uncommon) by Bitcoin traders.

I bet I can guess what you all are thinking by now. “What in the hell are lunar cycles and how on earth are they being used to trade Bitcoin?” Am I right? If so, continue reading while I break it down. 

Disclaimer: This is not to be taken as Financial Advice. Trading indicators can be highly speculative. This article is purely for your entertainment.

What Are Lunar Cycles?

  • According to my research, the lunar cycle strategy is based on buying on the new moon and selling on the next full moon. This site paints a clearer picture for us:
Source: O’Reilly
  • There are plenty of debates that have taken place around whether this method of trading is actually effective or not. However, depending on the stock index, the difference in return during the new moon phase is as high as 10% on average.

Lunar Cycles In Traditional Trading

  • There have been decades of studies conducted to prove that lunar cycles play a significant role in the price movement of the traditional stock market. The results have been quite interesting to say the least.
  • A MarketWatch article detailed some of the findings that came from a study conducted by researchers, Ilia Dichev and Troy Janes. 
Source: MarketWatch
  • The same article shares the results found by other researchers as well.
Source: MarketWatch
  • An S&P chart from the years 1950-2009 shows that stocks historically perform better during a Lunar Green Period (three days after a Full Moon) than a Lunar Red Period (three days after a New Moon). This data was gathered by tracking the Lunar Phases.
Source: Lunatic Trader
  • Another interesting point to make note of is there are other moon cycles that exist outside of Lunar Phases. However, they can be seen as inferior methods of tracking price movements compared to the Lunar Phases method. The other methods are listed below:
Source: Lunatic Trader
  • While this is intriguing for traditional markets, the question that we’re here to answer is does this have the same effect when it comes to Bitcoin?

Lunar Cycle And Bitcoin Correlation

  • Believe it or not, lunar patterns are fairly accurate when it comes to Bitcoin. In fact, some of these patterns have successfully outperformed regular trading patterns.
  • Will Clemente – one of the best young technical analysts in the industry – has also found lunar cycles to be interesting. The price movements in the chart seem to coincide perfectly with the lunar cycles.
  • You can find even more evidence of BTC and lunar cycle correlation within TradingView.
  • Lunar cycles aren’t just limited to Bitcoin. They can be effective in tracking other altcoins as well. Maren shows how they can be used to track L1s.

Conclusion

  • Lunar cycles are certainly an interesting way to determine price movement. Are these indicators more reliable than other traditional methods? I’m not sure that I’m totally convinced.
  • I’ve never been much of a technical analyst or trader. I prefer to use fundamental analysis and invest in great projects for the long term. However, I do think that one could make a case that lunar cycles can be somewhat useful according to the historical data. With that being said, indicators work until they don’t anymore.
  • If you’re one of the talented traders out there that have figured out how to make lunar cycles work for you, congratulations. I’ll continue to admire your work from the sidelines. Happy trading!