Bitcoin could write a new chapter in its history. On the weekly chart of the world’s largest cryptocurrency there is the formation of a “golden cross. This will be the first precedent of its kind since the existence of BTC. If the long-term moving averages complete the formation of a bullish crossover, it could be another confirmation of the beginning of a new bull market for cryptocurrencies.
Even in February of this year, the first-ever “death cross” appeared on the weekly chart for bitcoin. This event was also unprecedented, as no bear market has ever led to a similar situation before. But now there is a reverse crossover coming, a golden cross that could launch a long-term uptrend.
The first golden cross in BTC history
The golden cross is a key technical analysis signal. The classic golden cross and the death cross are defined on different timeframes by the interaction of two long-term 50-period and 200-period moving averages.
In the case of the 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 long-term price action of the asset.
We should add that the higher the time interval, the more significant the signal for long-term price action of the asset.
Bitcoin has been a strongly rising asset since the start of trading, and its 50W MA has never fallen below the 200W MA. The first death cross in BTC’s history appeared just earlier this year (red circle).
The reason for its appearance was that BTC’s price momentum weakened significantly during 2022, and its exchange rate fell 77% from its all-time high from November 2021.
It’s interesting that in the previous bear markets of 2014 and 2018, the drop in bitcoin’s price from historical highs was deeper – 86% and 84% respectively.
However, these periods were not followed by death crosses, as earlier bull markets provided much more growth. This caused a much greater distance between the 50W MA and the 200W MA, so the former could not fall below the latter.
Source: TradingView
Is the worst behind us
If we look at the above chart from a slightly different perspective, there is an additional argument for the start of a new cryptocurrency bull market. It is related to the movement of the 50W MA itself in relation to the historical price dynamics of BTC.
There are four moments when the 50W MA changed its direction after a long-term decline and began to rise (green arrows). This happened in July 2012, November 2015, and May 2019. The fourth bullish bounce of this moving average occurred last month.
If we compare these events to the trading history of BTC, we see a certain pattern, which is that every time the 50W MA started to bounce, the bear market was already ending and bitcoin had already reached the macrodynes (red circles).
If this rule works for the current cycle as well, the FTX crash in November 2022 and BTC at $15,600 will mark the end of the long-term decline. Therefore, the rebound of 50W MA is another argument for the beginning of a new bull market for the whole cryptocurrency sector.
The 50W MA bounce is therefore another argument for the beginning of a new bull market for the whole cryptocurrency sector.
Source: TradingView
When to expect a golden cross for BTC
If a long-term bull market has indeed begun, a golden cross on the weekly bitcoin chart is only a matter of time. 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. Downward 50W MA crossed from top to bottom 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 the golden cross follows 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 future BTC price momentum.
We will assume, however, that the behavior of the 50W MA will be historically similar to the previous 3 cycles.
We will assume, however, that the behavior of the 50W MA will bear a historical resemblance to the previous 3 cycles. In this case, the first golden cross in the history of bitcoin will appear on the weekly chart at the end of summer.
Source: TradingView