Bitcoin (BTC), the largest cryptocurrency by market capitalization, may be about to form a key technical pattern, with its daily moving averages likely to cross over in the coming days.
It is unknown whether the result will be a death cross or a golden cross; However, Bitcoin’s 50-day simple moving average (SMA) has turned higher and could cross the 200-day SMA in the coming days, hinting at a potential golden cross.
A golden cross occurs when a short-term moving average, typically the 50-day SMA, crosses above a longer-term moving average, typically the 200-day SMA, with the reverse indicating a death cross.
At the time of writing, BTC is up slightly over the past 24 hours, up 0.88% to $66,883 after the cryptocurrency market fell on Wednesday.
Bitcoin recovered from yesterday’s low of $65,149 to a high of $67,546 in today’s trading session after the Federal Reserve’s latest Beige Book survey showed a pessimistic outlook, strengthening the case for further rate cuts in the coming months.
Likely scenarios
As stated earlier, the nature of the cross will determine whether it is a golden cross or a death cross. Bitcoin’s current technical setup suggests that short-term price momentum is outpacing long-term momentum, indicating a likely golden cross, which is a bullish signal.
If the golden cross is confirmed, several scenarios are possible. In the past, Bitcoin has seen notable price increases following a golden cross event, which often signals a strengthening medium-term trend.
If so, Bitcoin’s price could rise above key resistance levels. Traders will be watching for BTC to break the $70,000 mark decisively, which could pave the way for further gains to $75,000 and beyond.
However, moving average crossovers are often criticized for being a lagging signal that can trap traders on the wrong side of the market.
If this happens, the golden cross could lead to a false breakout in which the price quickly rises but fails to maintain upward momentum, ultimately leading to a pullback. This outcome may be possible if broader market conditions remain unfavorable.
In some cases, the golden cross may precede a temporary pullback before the rally begins. This could happen if traders lock in profits in the short term, leading to temporary bearish pressure. However, after the initial decline, the market may regain momentum, causing prices to rise.
