The Silver Lining of Daily Bitcoin Trading

Authors: Siddhant Shah, Eugene Pinsky

Technical Analysis of STOCKS & COMMODITIES

Cryptocurrency Bitcoin Silver Cross-Asset Trading Predictive Modeling

Abstract

Buy-and-hold of bitcoin is hard to achieve for many reasons, so a trading system may help. Here’s a look at a simple trading strategy for bitcoin that references overnight silver returns to predict bitcoin 24-hour close-to-close returns. Find out how this strategy fared in a 10-year backtest.

Motivation

The relationship between precious metals and cryptocurrency markets has been a subject of increasing interest. This study explores whether silver, as a traditional store of value, can provide predictive signals for Bitcoin trading.

Methodology

Cross-Asset Correlation Analysis

We analyzed the statistical relationship between overnight silver returns and subsequent Bitcoin price movements, identifying exploitable patterns in market microstructure.

Strategy Implementation

  • Signal Generation: Overnight silver return calculations
  • Entry/Exit Rules: Systematic trading rules based on silver signals
  • Position Management: Dynamic sizing based on signal strength
  • Risk Controls: Maximum drawdown limits and volatility-adjusted positions

Key Findings

  • Annualized Returns: 68.65% over 10-year backtest period
  • Drawdown Reduction: Significantly lower maximum drawdowns compared to buy-and-hold
  • Market Regime Performance: Consistent performance across bull and bear markets
  • Risk-Adjusted Metrics: Superior Sharpe and Sortino ratios

Data and Backtesting

The strategy was backtested on 10 years of historical data, incorporating:

  • Transaction costs and slippage
  • Realistic execution assumptions
  • Multiple market conditions

Practical Considerations

Implementation details including:

  • Data sources and timing
  • Execution logistics
  • Risk management protocols

Conclusion

The research demonstrates that cross-asset signals from silver markets can provide valuable predictive information for Bitcoin trading. The strategy’s lower drawdown profile makes it particularly attractive for risk-conscious traders.

Publication Details

Published in: Technical Analysis of STOCKS & COMMODITIES (June 2025) Authors: Shah, S., & Pinsky, E.