Bitcoin’s 50-day simple moving average (SMA) has crossed above its 200-day SMA.
As cited in last week’s article, this was a key event to look out for, as a “golden cross” typically heralds more gains ahead.
According to Bloomberg data, over the past five years, Bitcoin rises by an average of over 20% over the two months following a “golden cross”.
Recall also, in our Bitcoin chart posted last week, a “golden cross” had preceded the bull runs of 2020 and 2021.
Crypto afficionados must surely be rubbing their hands in glee on seeing this technical formation, hoping for the same price surge to occur this year as well.
But things are different now – as the market cliché goes.
From a macro fundamental perspective, the biggest difference between the 2020 and 2021 Bitcoin bull runs and today is this: the Fed has been hiking interest rates aggressively in 2022, with more rate hikes in store.
In other words, long gone is the easy-money, when interest rates were at record lows, which sent risky assets soaring.
And we know that liquidity is a cornerstone for crypto gains.
Hence, now with major central banks draining liquidity out of financial markets, conditions are likely a lot tougher now for Bitcoin’s next bull run, despite the latest “golden cross”.
And that’s illustrated in the trading volumes across the crypto sector.
According to data from CoinGecko, 24-hour trading volumes have been around half of the $200 billion registered back in November 2021, back when Bitcoin registered its record high just shy of the $69k mark.
Despite two of the 3 factors cited in last week’s article having now come to pass – the latest Fed meeting and also this “golden cross – yet Bitcoin has barely strayed from $23k.
Perhaps all that’s left for Bitcoin bulls to hang their hats on is for the 3rd factor listed in last week’s article to materialise: Fund flows into Bitcoin
And such fund flows may indeed return with a vengeance if the pre-halving mania repeats itself in the lead up to this pivotal event that’s estimated to occur by June 2024.
A “halving” is when the rewards for mining Bitcoin is slashed by 50%. This occurs about every four years.
The lead up to halving often sees Bitcoin prices surge as the mania builds up towards this pivotal event, as was the case ahead of previous halvings on:
Still, it’s a long time between now and the next “halving” slated for mid-2024.
The crypto sector still needs to shake off more of its woes from last year, before it can even contemplate revisiting previous heights, not less until risk-on sentiment across broader financial markets are also given the all-clear to plough capital back into the riskier corners of global financial markets.
The world’s largest digital coin is holding up relatively well, despite the latest salvos against the crypto world.
28 March 12:10
The world’s largest crypto by market cap is taking a healthy pause after briefly breaching the $28,000 mark, though still holding around its highest levels since June 2022. Bitcoin’s year-to-date gains soared by as much as 72% before paring such advances to 67% at the time of writing.
21 March 10:55
Amid the ongoing SVB saga and the fears engulfing the traditional US financial system, Bitcoin is advancing for a fourth consecutive day, surging past its 50-day simple moving average (SMA) to come within touching distance of the psychologically-important $25k line.
14 March 11:19
At the time of writing, the value of the world’s largest crypto has fallen by about 2.9% so far this month. Bitcoin is now limping along, barely keeping its head above the psychologically-important $22,000 mark for the time being.
7 March 09:54
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