Analyzing the Effect of a Golden Cross on the Bitcoin Price

Well-known trader @Cryptowat_ch outlined a BTC chart that shows a golden cross in the daily time-frame. In addition, he has outlined the two prior golden crosses and the price movement succeeding them.

Even though the previous golden cross failed, he believes that this is common and is no cause to be bearish:

BTC is fast approaching its second golden-cross of 2020—crossover of the 50 above the 200 day moving average (SMA). The golden cross from last year resulted in a 160%+ upwards move. After the false start in February, will BTC be lucky the second time around?

In this article, we will take a look at the price movement during/after the previous golden crosses in order to determine what will happen this time around.

Previous Correction

After the 2013 high, the price began a long-term correction that lasted until January 2015. Between these two dates, a golden cross transpired in July 2014. However, the price decreased shortly afterwards and continued its downward movement until January 2015. During this period of 186 days, the price decreased by 75%.

Afterwards, there were two golden crosses that transpired in very quick succession, in July and October 2015. After the first one, the price decreased by 30% in the period of 32 days. However, after the October cross, the price increased rapidly, doubling over only 10 days. What is worth noting about the October cross is that it began a more than two year-long upward trend that eventually led to the all-time high price reached in December 2017. Therefore, there have been three golden crosses between the highs reached in December 2013 and 2017. While two of them led to downward moves, the third was the catalyst for a more than two year-long upward trend.

Current Correction

Since that 2017 high, there have been three more golden crosses in the daily time-frame, including the current one: The first one occurred in April 2019. After it, the price began an upward move that caused it to increase by 210% in 65 days. The other two are very reminiscent to those of 2015 covered in the previous section. They occurred in rapid fashion one after the other, the first in February while the second in May 2020. After the February cross, the price decreased by 62% over 24 days. It is yet to be seen what occurs after the current cross. If the price follows the pattern laid out after the successive golden crosses in 2015, it will begin a long-term upward trend.

Comparison & Conclusion

The time between the two crosses is very similar, being 90 and 83 days, respectively. However, as we looked back in the previous section, the price decreased by 60% in the current movement and only 30% in the 2015 one. Therefore, while there is a similarity between the time periods of these two golden crosses, the movement preceding/succeeding golden crosses throughout Bitcoin’s price history is not consistent enough to make a prediction for the future movement based on this occurrence alone. With that said, if the same pattern laid out in 2015 transpired this time around, BTC has already begun an upward trend that will continue for more than two years.