Bitcoin golden cross is on track to complete its first occurrence since early February, signaling a strengthening bullish momentum. This event takes place when the 50-day simple moving average (SMA) overtakes the 200-day SMA in an upward trajectory. Currently, the 50-day SMA is at $27,714 and rising, while the 200-day SMA is at $28,174. In the past two weeks, Bitcoin has rallied 30%, reaching levels above $35,000, last seen in May 2022.
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Understanding the Bitcoin Golden Cross
A golden cross suggests that short-term price momentum is outperforming the long-term, potentially leading to a bull run. However, it’s essential to note that these indicators are backward-looking and may not always accurately predict future trends. Bitcoin has experienced nine golden crossovers in the past, but three of them were invalidated within three months by death crosses and significant downtrends.
Despite this, traders who held a long position for a year following the occurrence of the first two golden crosses and the one in May 2020 would have made triple-digit percentage returns. It’s worth mentioning that Bitcoin reached a record high of $69,000 after the September 2021 Bitcoin golden cross, only to almost entirely erase its gains by the end of three months.
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Factors Influencing the Upcoming Golden Cross
The upcoming Bitcoin golden cross may prove to be significant, considering the optimism surrounding a potential launch of a U.S.-based spot ETF, macroeconomic uncertainty, and Bitcoin’s growing appeal as a haven asset. Additionally, next year’s mining reward halving is expected to have a bullish effect on Bitcoin’s price. The halving reduces selling pressure from miners and slows down the pace at which Bitcoin’s supply is diluted. Bitcoin’s fourth reward halving is scheduled for April 2024.
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The Significance of the Golden Cross for Traders and Investors
The golden cross in Bitcoin’s price chart suggests a bullish shift in the long-term trend. Traders and investors will be closely monitoring this development to gauge the potential for further price increases in the cryptocurrency. However, it’s crucial to approach these indicators with caution, as they may not always accurately predict future trends.
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Historical Performance of Bitcoin Golden Crosses
As mentioned earlier, Bitcoin has experienced nine golden crossovers in the past, with varying degrees of success. While some have led to significant gains, others have been invalidated by death crosses and downtrends within a short period. This highlights the importance of considering other factors when assessing the potential impact of a Bitcoin golden cross on the market.
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The Role of External Factors in Bitcoin’s Price Movement
External factors, such as regulatory developments, macroeconomic trends, and technological advancements, can also influence Bitcoin’s price. The upcoming golden cross may be impacted by these factors, making it essential for traders and investors to stay informed and consider multiple aspects when making decisions based on the Bitcoin golden cross.
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Conclusion
In conclusion, the Bitcoin golden cross is a significant event that suggests a bullish shift in the long-term trend. While it has historically led to substantial gains in some instances, it’s essential to approach these indicators with caution, as they may not always accurately predict future trends. Traders and investors should closely monitor the development of the upcoming golden cross and consider various factors when making decisions based on this event.
