Analysts Celebrate as Bitcoin Chart Prints Extremely Positive Sign
Bitcoin hasn’t fared too well over the past few days. The cryptocurrency, after a surge to $10,550 last week, started to trend lower into the weekend and out of it, reaching as low as $9,500 on Monday as sellers stepped in en-masse.
This means that since the local peak, BTC has corrected by 10% at its worst — a move that some analysts fear is a precursor to an even greater drop, for it may have shown that a trend reversal has transpired.
Despite these fears, the daily chart for Bitcoin recently printed a technical signal that analysts say is extremely powerful for the bullish narrative.
Bitcoin Chart Sees “Golden Cross”
Bitcoin’s volatility on the weekend shocked and worried many investors, but many of these fears were dashed on Monday when analysts observed that a key technical signal had appeared: the 50-day simple moving average and the 200-day simple moving average crossed, with the former moving over the latter for the first time in nearly a year.
For those not versed in technical analysis, this event is called a “golden cross,” for it signals that bulls are in more control than the bears. As Investopedia further describes it:
As long-term indicators carry more weight, the golden cross indicates a bull market on the horizon and is reinforced by high trading volumes. […] It is interpreted by analysts and traders as signaling a definitive upward turn in a market.
The golden cross seen quickly sent Bitcoin investors and commentators into a cheery frenzy.
Prominent commentator Crypto Capital Venture said that the chart with Bitcoin’s golden cross is the “most bullish picture in crypto right now.” Also, Ivan “Ivan on Tech” Liljeqvist, one of the industry’s most popular content creators,” said that this event is “INSANELY BULLISH” and it confirms that investors should “fasten [their] seatbelts for new all-time highs.”
To illustrate the seeming importance of Bitcoin’s golden cross, Blockonomi created the below chart, which shows every time Bitcoin saw a golden cross.
While not all instances of this technical analysis event led to a strong surge, most of the time the cross was seen, Bitcoin saw extremely strong rallies; in 2019, Bitcoin rallied by nearly 200% from the time of the golden cross, and the golden cross in October 2015 preceded an over 6,000% move higher.
Not the Only Thing Adding to Bitcoin’s Upside Potential
The crossing of the two aforementioned moving average isn’t the only thing that has Bitcoin investors extremely enthused about the next few months and next year or two for cryptocurrencies.
Speaking to Yahoo Finance in an interview, Tom Lee of Fundstrat Global Advisors said that every time Bitcoin has managed to reclaim and hold its 200-day moving average, prices have trended higher. He cited a statistic from his firm indicating that Bitcoin’s six-month gain was 197% if the aforementioned technical component was in place. This specific analysis suggests that should BTC follow the historical average, it will rise above $25,000 by the middle of this year.
In other interviews, he touched on the fundamental factors that could aid Bitcoin’s rise. Per previous reports from Blockonomi, Lee said that there are fundamental factors that could drive demand for Bitcoin much higher than it is right now.
Some of these fundamental factors that the researcher cited are as follows:
The upcoming U.S. presidential election likely driving regulatory pressure away from crypto, geopolitical and macroeconomic risk in trade wars and the coronavirus outbreak, and the upcoming block reward halving that in theory should shift Bitcoin’s supply-demand dynamic further in favor of bulls.
The post Analysts Celebrate as Bitcoin Chart Prints Extremely Positive Sign appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow