A bullish “golden cross” may form on the weekly BTC chart. This has never happened before in the history of bitcoin.
Bitcoin may write a new chapter in its history. On the weekly chart of the largest cryptocurrency in the world, the formation of a “golden cross” has been outlined. This will be the first such precedent for the entire existence of BTC. If the long-term moving averages complete a bullish crossover, this could be another confirmation of the start of a new bull market for cryptocurrencies.
Back in February of this year, on the weekly chart for bitcoin the first “cross of death” appeared in history. This event, too, was unprecedented, as no bear market had ever produced such a situation before. However, now the reverse crossover is coming – the golden cross, which can start a long-term uptrend.
First golden cross in BTC history
The golden cross is the key signal of technical analysis. The classic golden cross and death cross are defined on different timeframes by the interaction of two long-term 50-period and 200-period moving averages.
Accordingly, in the case of a weekly chart, the 50-week moving average (50W MA, orange) and the 200-week moving average (200W MA, blue) are taken into account. It is worth adding that the higher the time interval, the more significant is the signal for the long-term price action of the asset.
Since the start of trading, Bitcoin has been a strongly growing asset, and its 50W MA has never dropped below the 200W MA. The first death cross in BTC history only appeared at the beginning of this year (red circle).
The reason for its appearance was that the price dynamics of BTC weakened greatly during 2022, and its rate fell by 77% in relation to the historical maximum from November 2021.
Interestingly, in the previous bear markets of 2014 and 2018, the fall in the price of bitcoin from all-time highs was deeper – 86% and 84%, respectively.
However, these periods were not followed by death crosses as the earlier bull markets provided much more gains. This caused a much greater distance between 50W MA and 200W MA, so the first failed to fall below the second.
Source: TradingView
Has the worst been left behind
Looking at the chart above from a slightly different angle, there is an additional argument in favor of the start of a new cryptocurrency bull market. It is associated with the movement of the 50W MA itself in relation to the historical price dynamics of BTC.
At this stage, four points can be identified when the 50W MA reversed its direction after a long-term decline and began to rise (green arrows). This happened in July 2012, November 2015 and May 2019. The fourth bullish bounce of this moving average happened last month.
If we compare these events with the trading history of BTC, then we can see a certain pattern, namely: whenever the 50W MA started to rebound, the bear market was already ending, and Bitcoin was already reaching the macro bottom (red circles).
If this rule holds true for the current cycle, then the crash of FTX in November 2022 and BTC at $15,600 marks the end of the long-term decline. Therefore, the rebound of the 50W MA is another argument in favor of the start of a new bull market for the entire cryptocurrency sector.
Source: TradingView
When to expect a golden cross on BTC
If a long-term bull market has indeed begun, then the golden cross on the weekly bitcoin chart is only a matter of time. The current data allows us to make some assumptions about when this might happen.
The first ever weekly death cross was formed on February 13, 2023. The descending 50W MA crossed the 200W MA from top to bottom. However, as a result of the rise in the price of bitcoin since the beginning of this year, just 14 weeks later, the 50W MA bounced back. On May 22, she resumed her upward trajectory.
If we assume that the golden cross follows the same 14 week period, we can expect this event on August 28th. Of course, the slope of the 50W MA and the pace of its eventual return above the 200W MA will also depend on the future price action of BTC.
However, we will assume that the behavior of the 50W MA will be historically similar to the previous 3 cycles. In this case, at the end of summer, the first gold cross in the history of bitcoin will appear on the weekly chart.
Source: TradingView
See also: The number of bitcoin whales fell to a three-year low
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2023-06-28 13:52:00
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