In a remarkable turn of events, the price of Bitcoin has surged past the $70,000 mark per coin. This recent upward momentum has propelled BTCUSD to notable heights, resulting in the formation of a “Golden Cross” between two significant moving averages. This technical indicator has sparked interest as it has appeared twice since the bear market bottom, leading to noteworthy outcomes. Let us delve into the data and examine the implications of this confirmed signal.
Understanding the Bitcoin Daily Golden Cross: 50-Day and 200-Day Moving Averages
As depicted in the chart, BTCUSD has activated a daily golden cross involving the 50-day and 200-day moving averages. In the realm of technical analysis, a golden cross occurs when a short-term moving average surpasses a long-term moving average. This pattern is generally interpreted as a sign of a potential price increase within a trending market environment.
The converse, known as a death cross, serves as a bearish signal. Interestingly, despite the appearance of a death cross in August 2024, it did not result in a prolonged downtrend. This raises the question: could this recent golden cross possibly not yield a sustainable uptrend?
Examining the Third Golden Cross Since 2023
BTCUSD Golden Cross and Death Cross: A Recent Historical Perspective
By taking a broader view, we gain a clearer understanding of the signal’s efficacy since the bear market bottom in November 2022. Bitcoin’s ascent from lows around $16,000 to $23,000 was enough to propel the 50-day moving average above the 200-day average, initiating the first golden cross of 2023.
This upward trend continued until Bitcoin reached approximately $32,000, followed by a decline to retest lows near $25,000. The subsequent bearish price action triggered a death cross. Similar to the events in 2024, Bitcoin maintained a sideways trajectory, avoiding a downtrend. A slight upward movement eventually led to another golden cross, which saw BTCUSD rally by another 100%, effectively doubling its price.
The chart illustrates that the golden cross in October 2024 occurred just months after the death cross, mirroring the scenario in late 2024. Could this imply another 100% rally from current levels? If so, Bitcoin’s price might climb as high as $140,000 before showing signs of weakness.
Leveraging Moving Average Crosses as a Strategic Trading Approach
Evaluating Moving Average Crosses as a Buy and Hold Trading System
Utilizing the 50-day and 200-day moving averages as a buy and hold trading system since 2018 would have produced significant returns. The initial golden cross in April 2019 occurred at roughly $5,000 per BTC. A subsequent death cross in October 2019 closed the trade, resulting in the sale of some coins. A brief golden cross and death cross sequence in early 2020 led to a minor loss. However, May 2020’s golden cross more than compensated for it, triggering when Bitcoin was trading just below $10,000.
This trade remained open as Bitcoin embarked on one of its most bullish trends in recent history, eventually closing with the subsequent death cross in June 2021 at around $35,000 per BTC. This secured a $25,000 profit from the trade, in addition to the initial $4,000 profit from the 2019 trade, accumulating to $29,000. The minor loss brought the total closer to $28,500.
In September 2021, BTCUSD experienced another golden cross at approximately $45,000, only to shortly after death cross at a level $3,000 lower. This death cross persisted until Bitcoin shed an additional $30,000. Fortunately, employing the two moving averages as a buy and hold trading system allowed traders to switch to cash, thereby avoiding the worst of the bear market.
By early 2023, Bitcoin was ready to commence a new uptrend, and the golden cross triggered at $23,000. A subsequent death cross formed at $27,000, securing another $6,000 in profits. Another golden cross in October 2023 triggered at $35,000, riding the momentum to $62,000 when the most recent death cross closed the trade.
Across six trades, the 50/200MA trading system would have yielded approximately $58,500 as Bitcoin progressed from about $5,000 to $74,000. Four out of the six trades were profitable, and the two losses were relatively minor when compared to the profits generated.
Tony Severino, CMT, is the author of the CoinChartist (VIP) newsletter. Sign up for free. Follow @TonyTheBullBTC & @coinchartist_io on Twitter. Or join the TonyTradesBTC Telegram for daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
