Today, Bitcoin (BTC, the original and largest digital currency) fell below a specific technical threshold that the Performance portfolio uses as an automatic exit signal. That threshold is called the 200-day moving average. This post explains what that level is, why it was built into the portfolio rules, and what happens next.
A moving average is simply the average price of an asset over a set number of days. The 200-day moving average takes Bitcoin closing price on each of the past 200 trading days and computes their average. That average is recalculated every day as new prices come in. The reason 200 days is a standard reference point is historical observation: over many market cycles, assets trading above their 200-day average tend to be in an uptrend, and assets trading below it tend to be in a downtrend. The 200-day average is slow enough to ignore weekly noise but sensitive enough to capture real directional changes over months. For Bitcoin specifically, the 200-day moving average has historically been one of the cleaner dividing lines between bull markets and bear markets.
The Performance portfolio holds a Bitcoin ETF called IBIT (iShares Bitcoin ETF, a fund that tracks Bitcoin price and can be bought like any stock) when two conditions are both true at the same time: first, global money supply (a measure called M2, which tracks the total amount of money in circulation worldwide) is expanding; and second, Bitcoin price is above its 200-day moving average. When either condition is no longer true, the portfolio rule is to exit the Bitcoin position entirely. The reasoning behind this two-part condition is that Bitcoin tends to perform best when liquidity is expanding and its own price trend is positive. When the price trend turns negative even in a loose-money environment, it signals that something specific to crypto is weighing on the asset.
Today, Bitcoin traded at approximately 81,540 US dollars. Its 200-day moving average sits at approximately 82,228 dollars. Bitcoin is trading below its 200-day moving average by less than one percent. The condition has flipped. By the Performance portfolio rules, the exit trigger is now active.
One might ask why not wait and see if Bitcoin bounces, given the gap is only 0.8 percent. This is a natural instinct. But the value of a hard rule like the 200-day moving average is precisely that it removes this kind of discretionary second-guessing. The problem with waiting for a bigger drop before exiting is something called loss aversion bias: the tendency to hope a falling position recovers so we can exit closer to where we bought. This hope often causes investors to ride losses far deeper than intended. A hard rule cuts that bias out by being pre-committed. The cost of the rule is that you sometimes exit on a signal that reverses quickly. Bitcoin could trigger the exit today and bounce to 85,000 next week. That would feel like a bad trade. But the rule is designed to protect against the scenario where today dip is the beginning of a drop to 60,000, the scenario that causes real, lasting damage to a portfolio.
The Performance mandate says cash should stay below 5 percent under normal conditions. But the crypto rule is explicit: when the exit fires, the freed capital sits in short-term US government bills (SGOV, a fund holding treasury bills maturing in less than three months) until the conditions reset. This is not a permanent exit from crypto. It is a pause while the signal is negative. If Bitcoin reclaims its 200-day moving average and global money supply is still expanding, the portfolio would re-enter the position.
Systematic rules are uncomfortable to follow when you are close to the trigger line. A 0.8 percent gap feels trivial. But a rule that only applies when it is easy is not really a rule, it is a suggestion. The Performance portfolio runs on hard triggers precisely because the alternative (deciding each time based on how close the number is) leads to exactly the wishful thinking the rule was designed to prevent. Today proposed action: exit IBIT and move the capital to SGOV. The position closed at a cumulative gain of 4.10 percent from entry.