Bitcoin’s Seventh “Golden Cross”, in 10 years, is nearing – What does this mean for the BTC price?
Bitcoin will soon experience its seventh “golden cross”, a period in which it has experienced a surge of more than 40% over the past year. A golden cross refers to a technical event in which the 50-Day Simple Moving Average is (SMA) crossed the north side of the 200-Day SMA. A golden cross can be interpreted by traders and technicians as a buy signal or a sign that the price momentum is in favor of bulls.
If Bitcoin’s price does not plunge by more than 30%, it is the largest cryptocurrency market capitalization in the world. It also happens to be the first successful implementation cryptographically secure blockchain technology. Bitcoin’s 50-Day Moving Average (SMA) should rise above its 200-Day SMA within a week.
How Has Bitcoin Performed After Golden Cross Events?
If you had bought Bitcoin during each of the seven golden cross events, and kept it for 90 days you would have made a four-fifths of your investment. These gains would have had a wide margin between 10 and 80%. You would have been flat one time out seven times, and down by 20% and 45% on two occasions.
You would have gained five times as much if you had held the position for 365 consecutive days. The magnitude of your gains during this period can vary greatly from 25% to 400%. You would have fallen after 365 days on two occasions, one in early 2015 and the other in late 2021 or 2022.
The results will be a bit different if you modify the buy signal to say you only buy when there is a golden cross at the end of a long bear market, and not during a bull market. If you held the stock for 365 days following the July 2015, October 2015, and April 2019 golden crosses, your return would be approximately 130, 120, and 25%, respectively.
The 50-Day SMA is now below the 200-Day SMA as in the previous occasions. Assume that Bitcoin trades at around $23,000 to $24,000 during the next golden cross. Based on past performance, a 100% gain is possible in the next year. We could therefore talk about Bitcoin reaching the mid-$40,000s by early 2024.
Is Bitcoin’s Bear Market Over?
These factors make it easy to see how Bitcoin will recover in the next year.
First, 2023 is more likely to be a year that enables financial conditions to relax (which is often crypto-bullish) rather than tightening financial conditions like 2022. This is because inflation seems to have fallen rapidly, as the Fed acknowledged this week. The Fed may be cutting rates before the end the year to help a US economy in danger of falling into recession.
Additionally, Bitcoin’s bear market historically lasts around a year. Numerous technical indicators and on-chain indicators now indicate that the bottom is in for the bear market in 2022 (as discussed in this article).
Long-term trends in Bitcoin adoption are positive. Users and investors remain optimistic, and Bitcoin’s long-term trends in wider adoption (i.e. This golden cross adds another argument to the list about why the Bitcoin bear markets is over.