An important technical event just happened in the bitcoin market. For the first time in more than a year, bitcoin’s 50-day simple moving average (SMA), now at $19,825, moved north of its 200-day SMA, now at $19,723. When the 50-day SMA crosses above the 200-day SMA, technicians refer to this as a “golden cross” – a sign that there has been a meaningful positive change in market momentum. Tuesday’s golden cross was only bitcoin’s seventh in the last 10 years.
Some analysts view a golden cross as a buy signal, or at least include it in the suite of technical and other indicators they monitor when making trading decisions. Both the 50 and 200-day SMAs are widely followed technical indicators by investors, so a golden cross could potentially lead to higher buying pressure in the market. Bitcoin market, should this encourage more buyers to enter the market.
What next for bitcoin after the golden cross?
Now with the confirmation of the golden cross, many investors are asking whether this is a good buy signal. not necessarily. as discussed recently ArticleGolden Cross has had a mixed history of success Bitcoin Buy signal.
if you had bought Bitcoin At the time of each of the last seven golden cross events and held for 90 days, you would have been on your investment four out of seven times. The margin of these profits would have varied wildly between 10-80%. One time out of seven, you’re flat after 90 days, and on two occasions you’re down (20% and 45%).
If you had to hold out for 365 days, you would get up five times out of seven. Again, the magnitude of gains varied wildly from 25% to 400% over this time period. The two occasions when you would have fallen are after 365 days, with the brutal bear markets of 2014 in early 2015 and late 2021 through late 2022.
If you change the buy signal and buy only when there is a golden cross after the 50-day SMA is below the 200-day SMA for a long period of time (i.e. after a bitcoin bear market, not during a volatile bull market), The results are arguably more rapid. If you bought and held for 365 days after the July 2015, October 2015 and April 2019 golden cross events, you’d make (roughly) 130, 120 and 25% back, respectively.
As in these above events, the latest golden cross occurred after the 50-day SMA was long above the 200-day SMA. Given historical precedent, 100% profit next year is possible. In other words, we can easily talk about bitcoin reaching the mid-$40,000s in early 2024.
Bitcoin also sees weekly death cross, but may well bottom?
Complicating things is that bitcoin has just seen its first “death cross” on the weekly candlesticks. More specifically, the 50-week SMA has moved under the 200-week SMA for the first time in the cryptocurrency’s history, a sign that bitcoin bears will definitely be on hold.
However, this is just one bearish sign against a growing list of bullish signals. as discussed recently ArticleSeven of the eight technical and on-chain indicators tracked by analysts at crypto analytics firm Glassnode are glowing in their “Bitcoin Recovering from Bears” dashboard that is down. Separately, another major on-chain indicator tracked by crypto analytics firm CryptoQuant has just sent a definite buy to the Profit & Loss (PNL) index. Hint for the first time since 2019,
Positive on-chain and technical signs come as bitcoin adoption by the wider population continues, with the number of wallet addresses with non-zero balances likely to hit soon a new record high, Meanwhile, analysis of bitcoin’s long-term market cycles, such as one of the recent threads @CryptoHornHairs and according to Bitcoin’s stock-to-flow pricing modelsuggest that the cryptocurrency may be in the early stages of a multi-year bull market.
One threat to the bull narrative is if the US Federal Reserve is forced to take interest rates higher than market prices in 2023. Markets are currently betting on a few more rate hikes or above 5.0% before a rate cut. coming at the end of the year. but as Fed Chair Jerome Powell warned Tuesday, if US job market It remains as strong as it has been of late, and may need more tightening. However, we’re still only talking about a possible 100 bps additional rate hike this year, which is strictly far short of the 400 bps-plus seen in 2022.
Bitcoin Crypto Related Post