Bitcoin forms another ‘golden cross’, but this time round we’re not sure whether this is good news or bad news
Last Updated on 18 January 2024 by CryptoTips.eu
For the first time this year we’re witnessing a Bitcoin ‘golden cross’ in the charts. Last time this occured was on 1 November and it was followed by a 30% increase of the Bitcoin porice; However, we’re not so sure this time round because of other factors. So, how should this golden cross be interpreted, good or bad omen?
Death cross
There are two technical signals that anyone who reads a stock market chart should know. They are the ‘death cross’ and the ‘golden cross’. Both are lagging indicators. Whenever you see one of those two signs in a stock or a cryptocurrency chart, you can assume that experienced investors will either take their profits and sell (in the case of a death cross), or increase their purchases (in the case of a ‘golden cross’).
FIRST EVER WEEKLY 'GOLDEN CROSS' FOR BITCOIN pic.twitter.com/QHIrdI8rWM
— 🏝nathanhead.eth🏝 (@NathanHeadPhoto) January 17, 2024
The golden cross normally forms when the 50-day average rises above the 200-day average on a chart. Investors see this as a very bullish signal because it means there are more buyers in the short term than in the long term.
Lagging
However, there is a caveat because just like most technical indicators, the golden and death cross are both ‘lagging’ meaning they tend to show up after the event has taken place.
And this time the ‘golden cross’ is not formed on a daily chart, but on a weekly one, so it is a little later. It is being formed because we shot up to $49,000 last week (on the first day of the Bitcoin ETF introduction on the American stock exchanges).
ALERT: Bitcoin just confirmed its FIRST weekly golden cross pic.twitter.com/P2hK3TysCf
— Game of Trades (@GameofTrades_) January 16, 2024
So how should we interpret this? Well, at this point it’s still a bit too early in my opinion. Ethereum clearly had a much better week than Bitcoin (which lost an average of 6% in the last 7 days) and Solana also seems ready to make a leap. Unless Bitcoin manages to close above $50k by Sunday, no new green candle will follow on that weekly chart and therefore we won’t get confirmation of the continuation of that golden cross.
However, this signal will certainly be noticed on Wall Street. And at a time when the American, European and Asian stock markets are not starting the year very well, any bright spot of news is welcomed.