Bitcoin May Soon See A Golden Cross, But BTC Isn’t In The Clear Just Yet
Bitcoin To Soon See Long-Awaited Golden Cross
Ever since Bitcoin (BTC) began to stagnate last week, trading between $5,100 and $5,300 with no clear breakout, investors and analysts have been looking for technical signals to figure out where cryptocurrencies are heading next. While there hasn’t been a clear signal yet, what is known as a “golden cross” (a long-term moving average crossing under a short-term moving average) is about to be seen on the Bitcoin daily chart.
As researcher James Edwards, better known as Proof Of Research/CryptoMedication, explains, the 200-day exponential moving average (EMA) is about to be passed by the 50-day EMA if BTC holds above $5,200 for the following week. Simply put by Edwards, “this is huge.” The reason why he thinks so is that this technical trend often indicates that the bears are losing their grip and that a downturn has ended.
As Proof of Research notes, the last time BTC saw a 50-200 golden cross on its daily chart, the subsequent gain was 6,787%, as seen when Bitcoin rallied from irrelevance to $20,000 in a historical move. Thus, if history repeats itself, the bear market may be over, and a monumental rally may be in store for the asset.
Even though the golden cross hasn’t come to fruition, however, a similar move recently occurred. As reported by Ethereum World News on an earlier date, trader Jonny Moe spotted that the 20-day simple moving average (SMA) crossed with the 200 SMA just weeks ago. The last time this cross happened was October 2015, prior to the jaw-dropping price action seen in 2016 and 2017. And with this, he quipped that the chances the bottom is in “is certainly shaping up.”
Not In The Clear Just Yet
Even if the bottom is in and the golden cross finally occurs, Bitcoin might not be ready for an immediate rally as optimists expect. As Edwards pointed out in a later tweet, BTC is currently being heavily depressed by the 50 EMA on the one-week chart. The analyst calls that technical level a “beast,” pointing to the fact that each and every time Bitcoin tried to rally over the previous weeks, it has been stopped “dead in its tracks” by the 50 EMA.
This isn’t the only level that is stopping a cryptocurrency, rally, however. Cold Blooded Shiller recently drew attention to Bitcoin’s one-week Guppy, a collection of moving averages that aims to predict trends, resistances, and supports. And it didn’t exactly look all too pretty. While BTC’s 25% rally from $4,150 to $5,450 over the past three weeks allowed the asset to break out of the green band of the Guppy, the top (key resistance/trend reversal level) of the red band was rejected.
What’s equally as harrowing is a trend line recently depicted by Jacob Canfield. He claims he has seen a trend line develop since late-2015, which supported BTC during four drawdowns in the 2016 to 2017 run-up. However, during this bear market, that former key support level has turned into heavy resistance. Earlier this year, BTC tried to pass $4,400, but was rejected off that trendline, and last week, BTC tried its hand at pushing past $5,500. This move, as you know, failed miserably, with the asset seeing an immediate 10% pullback to $4,950 as a result of the rejection.