The Golden Cross, or golden crossover, is a chart pattern that involves crossing a simple (MA) or exponential (EMA) moving average with a longer term one. In particular, in cryptocurrencies many traders use "fast" averages at 50 periods and "slow" at 200 periods on the daily time-frame. When the 50-period average crosses the 200-period average from the bottom upwards, a golden cross is said to have formed. This is a very bullish signal for the price and indicates a trend reversal which in this case becomes bullish. If we think about it, in fact, when the short-term average price exceeds the long-term average price, a potential change of direction of the market trend takes place, and this is why a golden cross is considered bullish.
The EMAs are much more responsive to a recent price change and will therefore be the first to cross higher than the MAs. On the contrary, in the event of a bearish trend, the slower EMA lowers quickly and "runs away" from the fast one, bringing the death cross (crossing of the 50 period average with the 200 downward one) to slip by a few days. If you look at the Bitcoin chart (BTC/USDT), in fact, the death cross took place on 2021-06-19 if calculated with simple moving averages and on 2021-06-23 with exponentials. This is because the EMA200 is faster lowering than the MA200.
However, after several weeks of laterality following a death cross, we will finally have the opportunity to witness a golden cross. But when will it happen? We saw the latest in mid-May 2020 and kicked off a positive trend with exponential growth for Bitcoin. Can we therefore expect another major upside?
Unfortunately, no one has the crystal ball to predict the future. We can only rely on some facts to make some considerations.
First of all, let's analyze some on-chain data: I am referring above all to outflows from exchanges. It has been seen that in recent weeks more Bitcoins have come out of the exchanges than have entered and the reserves are continuously decreasing. I leave you an interesting Twitter profile that is based on Glassnode data.
How can the price be expected to drop when investors continue to accumulate?
Another thing that in my opinion we must not overlook is the prediction made by the Stock to Flow model. As I explained in THIS article, I am firmly convinced of what the model says and I am not the only one. The prediction is that the price should be two times higher than it is now and it will surely adjust sooner or later as it has in the past.
However, back to the main discussion, I think that if the price remains at $43,000 or higher the golden cross will be inevitable and we should be able to see it by late August or early September. My crudely made prediction is this and is based on the premise that the price continues its uptrend at $42-43k. I leave the rest of the considerations to you as everyone is free to think and see what they want in the graphs. Now, however, I invite everyone to take a minute of silence for those who have sold their BTC for $ 29k each.
What do you think about it? Are you bullish or bearish in the short term?
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