Daily Brief - It’s here: the Golden Cross! (Oct 1, 2021)
The infamous Golden Cross. A sliver of hope for Bitcoin investors. This may finally be the moment they were waiting for.
Ok, but what is it?
A Golden Cross pattern is a technical indicator signaling upcoming upside. This occurs when the 50-day moving average of an asset rises above its 200-day average. A faster moving average rising above the slower one is often assumed to signal an inflection point in the trend: time to stop the decline. It finally happened again on September 24.
There have been 6 occasions in the past when the Golden Cross pattern occurred in the Bitoin chart. Most - but not all - of those resulted in a move up in price. TOGGLE analysis of past data suggests we could see a move up of around 30%.
The last time we observed the Golden Cross before September 24 was in May of last year. The price would rise ten-fold over the next 11 months - hitting a peak of more than $64,800. At the time, major central banks were pumping liquidity into the market to contain the repercussions of the coronavirus pandemic. Many market analysts believe Bitcoin’s bull rally was driven by this extra liquidity and demand for an inflation-hedged asset, known as “digital gold.”
This most recent Golden Cross comes at a much trickier time: the economy is doing better, yields are rising, Fed is talking about tapering … Then there is increased risk of regulation, threatening to alienate the cryptocurrency core base of fans. On Tuesday, chairman of the SEC Gary Gensler stressed on the importance of regulation for “any crypto products offering returns.”
The past has also shown us that macroeconomic factors can push markets in unpredictable directions. *Cough* BABA...
At least one bad news is out of the way: Congress approved a stopgap funding bill - allowing the government to continue functioning until the 3rd of December. But if you’re known as the “digital gold”, is bad news good news?
We’ll find out soon.