Crypto News

Bitcoin to Form Golden Cross but It Cannot Guarantee a Bull Run

Bitcoin traders are enthusiastic about a textbook technical indicator whose formation could send the asset’s prices higher.
Dubbed as Golden Cross, the candlestick pattern will occur when bitcoin’s short-term moving average closes above its long-term moving average. On the cryptocurrency’s daily charts, the 50-period MA is inches away from jumping above the 200-period one, fueling traders’ buying sentiment atop bitcoin’s 42 percent price rally in 2020.

#Bitcoin golden cross between 50 & 200 MA coming SOON! Bullish!
— The Moon (@themooncarl) February 14, 2020

Mixed Signals
But history shows that Golden Crosses are not always accurate in predicting long-term upside moves. In the Gold market, for instance, there have been many instances wherein the bullish continuation indicator has delivered a complete opposite of an upside run.
Commodity data analysts at Sunshine Profits noted that since 2009, purchasing gold after a golden cross formation did not deliver gains. In 2014, for instance, the gold market formed Golden Cross multiple times, only to result in unsustainable upside rallies.
“This means that the golden cross in gold is not a reliable bullish indicator and viewing it as such does not seem like a profitable thing to do,” wrote Sunshine Profits in one of their columns.
Gold’s Golden Cross over the recent history | Source: Sunshine Profits
In bitcoin’s case, the formation of a Golden Cross has yielded wild price rallies so far.
The last of such moves occurred in April 2019, wherein the price surged by 170 percent three months after making a Golden Cross. Similarly, the same candlestick pattern in October 2015 followed bitcoin registering one of the history’s biggest price rallies – from $300 to $20,000 in just two years.
But, it is the same asset that registered a massive drop after logging its all-time high at circa $20,000. In total, bitcoin is still trending almost 50 percent down from its historic top – and one indicator alone cannot promise to bring another $10,000 to its valuation.
Converging Bitcoin’s Fundamentals
Technical indicators lag fundamentals. Bitcoin was able to form a Golden Cross in 2019 because investors treated it as an insurance asset against the then-escalating US-China trade war and yuan devaluation. The technical pattern later extended because of the hype created by Facebook’s foray into the cryptocurrency sector with Libra.
But then, traders took their profits and crashed the prices from circa $14,000 to as low as $6,430 as regulators brushed aside Libra and US-China agreed to work out a deal.
Bitcoin’s imminent Golden Cross formation comes on the backing of two key catalysts: halvening and monetary easing.

With halvening, bitcoin’s daily supply rate is scheduled to get slashed down from 1,800 BTC to 900 BTC. At the same time, central banks’ decision to inject hundreds of billions of dollars into the economy as a measure to safeguard it from global risks is somewhat helping bitcoin as investors’ offbeat risk-on asset.
Therefore, should these catalysts sustain, investors have a reason to enter or stay put in the bitcoin market. It would further prolong the Golden Cross formation.
If not, the bullish formation could fail, as it did in the case of Gold in 2014.

Related Crypto News

Bitcoin Just Surged to $6,500 After Over 10% Weekend Crash
In the past 20 minutes, Bitcoin has traded above $6,500, marking a rapid 12% gain from the $5,800 bottom...
How the Dow’s Fractal of Doom Could Take Bitcoin to $1,000
Throughout 2020 thus far, Bitcoin has been showing a tight correlation with major stock indexes like the Dow Jones...
Bitcoin Poised for Continued Downside as Bulls Struggle to Surmount Critical Level
Bitcoin’s decline to lows of $5,800 overnight was met with significant buying pressure that subsequently allowed the cryptocurrency to...
Egypt Limits Bank and ATM Withdrawals Citing Rampant Cash Outflow and Coronavirus Fears
On Sunday, the Central Bank of Egypt (CBE) announced it had instructed financial institutions in the country to put...
Ethereum is Nearing a Make or Break Level; Rejection Here Could Be Dire
After facing an intense selloff yesterday that led Bitcoin, Ethereum, and virtually all other major altcoins to post some...
Crypto Market Reaches Longest Stretch of Extreme Fear In Over A Year
Bitcoin and the rest of the crypto market has since staged a strong recovery following the massive, record-breaking crash...

Featured Crypto News

Do or Die For Bitcoin Bulls: Here’s What Could Trigger A Strong Rally
Bitcoin is slowly rising and trading above the $6,750 level against the US Dollar. BTC price must claim the...
Bitcoin Hashrate Down 45% – Miners Witness Second-Largest Difficulty Drop in History
Bitcoin’s hashrate has plummeted 45% since the record-breaking levels it saw on Feb. 29. The hashrate touched an all-time...
Ethereum is Primed For a Rally And Only 1 Thing is Holding it Back
Ethereum is still facing a strong resistance near the $142 and $144 levels against the US Dollar. A successful...
Chances Are, Bitcoin Will Soon Explode 20% Higher to $8,000: Here’s Why
Despite the brutal crash seen earlier this month, Bitcoin has performed extremely well over the past few days, rallying...
4 Virtual Crypto Conferences You Can Attend From Home
The crypto industry has had to quickly adapt to the escalating coronavirus pandemic, with major conferences postponed, canceled or...
Here’s Why Bitcoin’s 15% Rally Could Fail Near The Key $6,500 Barrier
Bitcoin is up more than 15% and it broke the $6,000 resistance against the US Dollar. However, BTC price...