Bitcoin Achieves Historic ‘Golden Cross’ on Weekly Chart Amidst Market Enthusiasm
In a groundbreaking development for Bitcoin enthusiasts, the cryptocurrency has witnessed its inaugural weekly ‘golden cross,symbolizing a positive shift in asset prices. The long-anticipated event occurred as the 50-week simple moving average (SMA) on Bitcoin’s price chart crossed over the 200-week SMA for the first time in recorded history, officially validating the golden cross.
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Bitcoin Golden Cross
Originating in Japan and detailed in technical analysis textbooks, the terms “golden cross” and its counterpart, “the death cross,”. Play pivotal roles in deciphering market trends. The former, a bullish indicator, signifies a long-term bull market, while the latter occurs when the short-duration SMA falls below the long-duration SMA, indicating potential bearish trends.
Despite the optimistic outlook associated with crossovers, seasoned traders exercise caution, recognizing them as lagging indicators influenced by historical data. The first-ever golden cross on Bitcoin’s weekly chart is attributed to the cryptocurrency’s remarkable 70% rally, propelling it to $42,700 within a span of four months.
Notably, traders have observed that crossovers often coincide with trend exhaustion, as evidenced by the confirmation of the weekly death cross in early 2023. Marking the bottom of the bear market. While Bitcoin’s daily chart displays a mixed record in predicting bullish and bearish trends through golden and death crossovers. The current scenario sees the cryptocurrency trading 10% lower from its recent highs of $49,000.
Bitcoin’s Rally
The setback in Bitcoin’s rally is linked to the introduction of 11 spot exchange-traded funds (ETFs) in the U.S. With the cryptocurrency experiencing a 10% decline post-launch. Greg Cipolaro, Global Head of Research at NYDIG, attributes this decline to the mismatch between early ETF flows and the market’s exceedingly high expectations.
In a newsletter on Tuesday, Cipolaro commented, “The Net flow of funds for the ETFs has been $965M (including seed funds), a strong start thus far. However, the spot price is down from the launch-driven euphoria as investors set unreasonably high launch expectations.
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In approximately six months, Bitcoin undergo a “halving,” reducing the new bitcoins awarded to miners by half. Satoshi Nakamoto introduced this event in 2009 as an anti-inflationary measure. Occurring roughly every four years, the lead-up to halvings traditionally proves the most profitable time for crypto investors. “Buying bitcoin six months before a halving and selling 18 months after has historically outperformed a ‘buy and hold’ strategy,” affirms the analyst.
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