The Bitcoin price is now above $70,000 per coin. The recent rally back to local record highs has taken BTCUSD high enough to cause two major moving averages to form a ‘Golden Cross’. This signal has appeared twice since the bottom of the bear market and has produced significant results. Let’s take a look at the data and the latest signal now that it has been confirmed.
Bitcoin Daily Golden Cross: 50 and 200 day moving averages
As depicted above, BTCUSD has caused a daily gold crossing of the 50-day and 200-day moving averages. In technical analysis, a golden cross occurs when a short-term moving average rises above a long-term moving average. This generally suggests that there is an active trend environment and the price is expected to rise.
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The opposite, bearish signal is called a death cross. The chart above also shows a death cross in August 2024. However, its appearance did not lead to a long-term downtrend. Could this also mean that this latest golden cross may not produce a sustainable uptrend?
BTCUSD Gold Cross and Death Cross Recent History
Zooming out provides a clearer view of the effectiveness of the signal since the bear market low in November 2022. BTCUSD’s rise from the bear market low of around $16,000 to $23,000 was enough to push the 50-day moving average above the 200- days average, which led to the first golden cross of 2023.
This caused Bitcoin to continue rising higher until it reached around $32,000, after which it fell to retest lows around $25,000. The short-term bearish price action then caused a deathcross. Here, just like we saw in 2024, Bitcoin trended sideways and avoided a downtrend. It didn’t take much of an advantage to force another gold cross. From that golden cross, BTCUSD rose another 100%, doubling its price.
The chart above shows that the golden cross in October 2024 occurred just a few months after the death cross, just as it did in late 2024. Could this mark another 100% increase from current levels? If so, the Bitcoin price could reach as high as $140,000 before it starts to show weakness.
Buy and Hold: Using Moving Average Crosses as a Trading System
Using the 50-day and 200-day moving averages as a buy and hold trading system as of 2018 would have yielded significant results. The first gold cross shot around $5,000 per BTC in April 2019. A death cross in October 2019 shut down trading and sold off some coins. A quick combination of golden cross and death cross in early 2020 led to a small loss. The golden cross of May 2020 more than made up for this, when Bitcoin was trading just below $10,000.
Trading remained open as Bitcoin ushered in its most bullish trend in recent years, eventually closing with the next deathcross in June 2021 around $35,000 per BTC. This left $25,000 in profit from the trade, combined with the initial $4,000 profit from the trade in early 2019, yielding $29,000. The small loss brings the total closer to $28,500.
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In September 2021, BTCUSD once again crossed the golden cross at around $45,000, only to drop the deathcross at $3,000 shortly later. This death cross remained active until Bitcoin lost another $30,000. Fortunately, using the two moving averages as a buy and hold trading system meant that the death cross got you into cash – avoiding the worst of the bear market.
At the beginning of 2023, Bitcoin was ready to start a new uptrend and the golden cross reached $23,000. A $27,000 death cross formed, leaving another $6,000 in profit. Another gold cross in October 2023 was at $35,000, rising all the way to $62,000 when the most recent death cross closed the trade.
In six trades in total, the 50/200MA trading system would have made about $58,500, while Bitcoin traveled from about $5,000 to $74,000. Four out of six trades were profitable and the two losses were relatively small compared to the profits generated.
Tony Severino, CMT is the author of the CoinChartist (VIP) newsletter. Sign up for free. To follow @TonyTheBullBTC & @muntartist_io on Twitter. Or join the TonyTradesBTC telegram for daily market insights and technical analysis education. Please note: the content is educational and should not be considered investment advice.
Featured image from ChatGPT, charts from TradingView.com