Dear Bitcoin merchants, Golden Cross is not always a sign of high


The whole bitcoin trading community is holding their breath by a crucial high sign known as the Gold Cross.

It all started on April 2, when the price of bitcoin – finally – broke above a strict resistance area and rose 23% in a day. This upward movement has changed all the dynamics of the market. Almost all the technical indicators that were shouting bassists became bullish at night. Buying feeling returned. Sales sentiment declined. But more importantly, bitcoin was able to sustain its gains, although it did not extend it.

The extent of profit is now what the bitcoin trading community is looking for – many expect large whales to buy bitcoins at higher highs recently, so that price rises and further strengthens sentiment. But wait we were talking about the Golden Cross.

Understanding the Bitcoin Assassin's High Sign

A gold cross is established when the short-term moving average of a market crosses above its long-term moving average. Speculators take this as a sign of a high-spread feeling. That said, a golden cross sign on the bitcoins market is Christmas for many. Take a look:


The rising price of bitcoin awaits its moment "Golden Cross" | Source:

The red curve in the graph above is the moving average of bitcoin calculated over 200 days.

Likewise, the blue below reflects 50 days. The short-term moving average tends to rise faster than in the long term, when the market has a huge volume of intermediate purchases. As a result, the 50-day moving average exceeds the average of 200 days. That's what defines a gold cross.

Not always optimistic

The history of the financial market shows that investors love the gold cross. For example, the Dow Jones industrial average experienced the phenomenon on April 26, 2016, after four years. What followed was a steady upward swing in which DJI rose from 18,080 points in April 2016 to 26,743.50 points in September 2018.

But wait, there's another story.

In 2014, the gold market formed the gold cross four times: 2009, but a major rally occurred only once. Take a look at this chart (courtesy of our friends):

bitcoin, gold, golden cross

A Golden Cross failure in the gold market | Source: Profits of the Sun

Statistics prove that the Golden Cross indicator worked for any market except gold. It should particularly interest investors who believe that bitcoin is a "digital gold". It is clear that the underlying dynamics of the cryptomeotide market are remarkably similar to that of the yellow metal. Both are durable, scarce and have similar properties to commodity assets. Therefore, it would be safe to assume that the bitcoins market is more likely to behave like the gold market.

Well, Golden Cross does not work for Gold as much as for the S & P 500, DJI and Nasdaq.

"Instead of focusing on something with a mixed record, you should focus on the pending change in Fed policy," writes Jordan Roy-Byrne of Kitco. "Historical data show that it is when rebounds and bull markets usually begin in gold stocks."

So, as a risk measure, we bitcoin operators should not rely entirely on Golden Cross. Less losses can also mean more gains, after all.


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