As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous market trends and cycles. The recent golden cross formation in Bitcoin has certainly piqued my interest, given its historical significance as a bullish indicator. However, it’s important to remember that past performance is not always indicative of future results.
Bitcoin (BTC) has just experienced a “technical pattern” known as a “golden cross,” which is often seen as a positive sign for potential price growth. This happens when the average price over the last 50 days goes above the average price over the last 200 days, suggesting an increase in bullish sentiment. In simpler terms, Bitcoin’s short-term average price (50-day SMA) has now moved above its long-term average price (200-day SMA), a situation we call a “golden cross.
Investors and market observers often closely monitor this pattern since, in the past, it has typically indicated upcoming increases in Bitcoin’s price as well as other assets. However, it is essential to note that a golden cross doesn’t always promise future growth; instead, it has been a hopeful signal during previous Bitcoin bull markets.
As a researcher examining Bitcoin trading patterns, I found that an investor who held onto their BTC for a year between the first two golden crosses and the one in May 2020 would have experienced substantial profits in triple digits. Following the latest golden cross in October 2023, Bitcoin’s worth nearly doubled, reaching unprecedented highs of approximately $74,000 by mid-March, setting new all-time records.
However, moving average crossovers are sometimes criticized for being a lagging indicator that traps traders on the wrong side of the market. Bitcoin’s most recent death cross, the opposite of a golden cross, trapped bears on the wrong side of the market, and the price of Bitcoin recovered above $66,000 barely a month later.
What comes next?
As I compose this text, Bitcoin was experiencing a 2.37% increase over the past 24 hours, reaching a value of $68,610 with intraday highs at $68,758. Following a low point of $65,500 on October 25, Bitcoin started to recover and regain momentum. If Bitcoin manages to close in the positive today, it will mark its third consecutive day of growth.
To trigger a continuation of the upward movement within the current price range, which peaks at around $73,777, buyers need to push the price above $69,550. This level of $70,000 currently presents some resistance, but it might be overcome. If this happens, Bitcoin could potentially rise to $72,000. However, it’s important to note that bulls may encounter strong opposition from bears at higher price points.
In a less favorable scenario, a breakdown might provide an advantage to the bears, causing the Bitcoin price to drop below $65,000. If this occurs, Bitcoin may dip beneath its 50-day simple moving average of $63,254 and potentially even reach the crucial support level of $60,000.
On the broader economic scene, investors are set to scrutinize numerous statements from central banks, following last week’s International Monetary Fund meetings in Washington D.C. At present, Federal Reserve officials are under a silence period that prevents them from making comments until the upcoming rate decision next week.
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2024-10-28 17:14