The long-awaited golden cross has appeared on the Bitcoin chart. This is the first such signal in 510 days, or almost 1.5 years. If history repeats itself, this lagging indicator could confirm the start of a long-term bull run in the crypto market.
Just five days ago, a golden cross was reported on the S&P 500 chart, an indicator of the health of the traditional U.S. stock market. Today, the same signal is showing up on the Bitcoin chart, determining the state of the broader crypto market. Should we expect the rally that started in January 2023 to continue?
First Golden Cross Bitcoin in 1.5 years
The golden cross is a very popular lagging indicator in long-term technical analysis of traditional markets. Although there are different versions, the most famous is the 50-day moving average (MA 50D) that cuts into the 200-day moving average (MA 200D).
On the one hand, this event only occurs when the price of the asset increases. Therefore, the golden cross simply confirms the reversal of the uptrend. On the other hand, the event confirmed a long-term change in market structure. So the consequences may not be felt until months after the signal appears.
The last golden cross on the Bitcoin chart occurred 510 days ago – September 14, 2021. The signal comes after BTC hit a low of $29,000 in summer 2021 and rebounded again. The price then moved up to the current all-time high (ATH). BTC reached $69,000 on November 10, 2021. Measured from the previous golden cross to the absolute top, Bitcoin is up 45%.
bitcoin chart | Source: tradingview
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Average Gain 1.835% one drop 61%
In order to better understand the impact of the golden cross on the Bitcoin market, it is necessary to look at the price action following the historical signal. Looking at BTC trading history in 2015, we see 5 golden crosses. Four of them led to a massive increase in the price of Bitcoin, while another golden cross resulted in a massive drop in Bitcoin price:
October 28, 2015: Bitcoin rallies 6,566% to all-time ATH of $20,000
April 23, 2019: Bitcoin rallies 154% to local top of $14,000
February 18, 2020: Bitcoin falls 61% to macro bottom at $3,850
May 20, 2020: Bitcoin jumps 574% to previous ATH of $64,900
September 14, 2021: Bitcoin up 45% to current ATH of $69,000
bitcoin chart | Source: Tradeview
Thus, the average of 4 of the 5 historical gains after the golden cross yielded 1.835%. If Bitcoin makes such gains in the next bull market, it will be worth $445,000 (compared to the current level of around $23,000).
On the other hand, if there is a stock market crash similar to that seen in March 2020, the price of BTC could plummet to $9,000.
Neither scenario seems likely to happen in the next few months. Historically, golden cross signals have been accompanied by increased volatility, which has often resulted in short-term corrections in BTC prices.
However, without this breaking key support levels, a strong rally will follow. Only then can the real bull market begin. Conversely, if Bitcoin falls below long-term support after a golden cross like the COVID-19 crash, the overall cryptocurrency market has reached new lows.
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According to Beincrypto
