Bitcoin (BTC): an unprecedented event for the bulls loomed on the horizon
Date: 2023-06-28 Author: Karina Ziganova Categories: BLOCKCHAIN
A bullish "golden cross" may form on the weekly BTC chart. This has never happened before in the history of bitcoin
Bitcoin can write a new chapter in its history. On the weekly chart of the world's largest cryptocurrency, 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 the formation of a bullish crossover, this could be another confirmation of the beginning of a new bull market for cryptocurrencies.
Back in February of this year, the first ever "death cross" appeared on the weekly chart for bitcoin. This event was also unprecedented, since no bear market had led to such a situation before. Now, however, a reverse crossover is coming, a golden cross that could trigger a long-term uptrend.
The first golden cross in the history of BTC
The golden cross is a key signal of technical analysis. The classic golden cross and the death cross are determined 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 the signal is for the long-term price action of the asset.
From the very start of trading, bitcoin has been a strongly growing asset, and its 50W MA has never fallen below 200W MA. The first death cross in the history of BTC appeared only 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% compared to the all-time high of November 2021.
Interestingly, in the previous bear markets of 2014 and 2018, the fall in the price of bitcoin from historical highs was deeper - 86% and 84%, respectively.
However, these periods were not followed by death crosses, as earlier bull markets provided much greater growth. This resulted in a significantly greater distance between 50W MA and 200W MA, so the former failed to fall below the latter
Is the worst behind us?
If you look at the above chart from a slightly different point of view, then there is an additional argument in favor of starting a new crypto bull market. It is related to the movement of the 50W MA itself in relation to the historical price dynamics of BTC
At this stage, there are four moments when the 50W MA changed its direction after a long-term fall 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, we can notice a certain pattern, namely, that whenever the 50W MA started to rebound, the bear market was already over, and bitcoin had already reached the macro bottom (red circles).
If this rule works for the current cycle as well, then the collapse of FTX in November 2022 and the BTC rate at $15,600 mark the end of a long-term decline. Therefore, the 50W MA bounce is another argument in favor of starting a new bull market for the entire cryptocurrency sector.
When to expect the Golden Cross on BTC
If the long-term bull market has really begun, then it is only a matter of time before the golden cross on the weekly chart of bitcoin. 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 downward 50W MA crossed from top to bottom of the 200W MA. However, as a result of the rise in the price of bitcoin since the beginning of this year, after just 14 weeks, the 50W MA bounced back. On May 22, it resumed its upward trajectory.
If we assume that the golden cross will follow the same 14-week period, we can expect this event on August 28. 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 performance of BTC.
However, we will assume that the behavior of the 50W MA will have historical similarities with the previous 3 cycles. In this case, at the end of summer, the first golden cross in the history of bitcoin will appear on the weekly chart.
