Bitcoin Witnesses Its Historic First Weekly 'Golden Cross'

• Bitcoin Observes Golden Cross Indicative of Favorable Asset Price Shift
• Effects of Crossover on Market Trend Predictions
• Current State of Bitcoin Rally

Bitcoin Observes Golden Cross Indicative of Favorable Asset Price Shift

The Bitcoin$42,260 -0.64% (BTC) weekly price chart has witnessed a golden cross, a term popular among market fanatics indicating a positive shift in asset prices. This occurrence is marked by the 50-week simple moving average (SMA) of Bitcoin crossing above the 200-week SMA, a first in its history, affirming the golden cross. This term and its opposite, the death cross, which depicts a scenario where the short-duration SMA falls below the long-duration SMA, have their roots in Japan according to some technical analysis texts.

Effects of Crossover on Market Trend Predictions

Crossovers are often perceived by traders as forward-looking indicators, with golden crossovers potentially signalling a protracted bull market in the future. However, this optimistic interpretation might face challenges given that averages are dependent on historical data and tend to trail prices. In simple terms, averages reflect past occurrences, and the first-ever golden cross on Bitcoin's weekly chart is a consequence of Bitcoin surging by over 70% to $42,700 within four months. Therefore, experienced traders view crossovers as lagging indicators, typically concurrent with trend exhaustion. For example, the weekly death cross confirmed at the start of 2023 signaled the end of the bear market. Bitcoin's daily chart golden and death crossovers bear inconsistent records of forecasting bullish and bearish trends.

Current State of Bitcoin Rally

Bitcoin's rally seems to have hit a roadblock, witnessing a 10% decline from highs around $49,000 post the initiation of trading by 11 spot exchange-traded funds (ETFs) in the U.S. last Thursday. Market observers suggest that the bullish momentum may have lost steam due to ETF flows not meeting the extraordinarily high market anticipations. Greg Cipolaro, Global Head of Research at NYDIG, mentioned in a Tuesday newsletter that The Net flow of funds for the ETFs has reached $965M (including seed funds), off to a robust start. Nonetheless, the spot price has descended from the launch-driven euphoria as investors had set excessively high launch expectations.

Edited by Jonathan Stoker