Golden Cross and Death Cross: Behind the Bitcoin Strategies

Typically, traders will buy at a golden cross and sell at a death cross. As of today, the live Bitcoin price is $22,012, with a 24-hour trading volume of $16.6 billion. Bitcoin is currently ranked #1 on CoinMarketCap, with a live market cap of $424 billion.

This pattern is very different from the death cross pattern, where the death cross pattern forms a downward pattern. To summarize, A golden cross occurs when a short-term MA crosses above a long-term MA. A death cross occurs when a short-term MA crosses below a long-term MA. They can both be used as reliable tools for confirming long-term trend reversals in the stock market, forex, or cryptocurrency.

What Should Traders Do When The Death Cross Pattern Happens?

However, the longer the averages used when hunting for a golden cross, the stronger the indicator is in terms of foreshadowing upward price movement. A key benefit of using golden crosses and death crosses is simplicity. Similar to a golden cross, a death cross is a trading signal also based on the moving averages of historical prices.

And other cryptocurrencies were little changed Monday, remaining lower from recent levels amid concerns that pressures on crypto -focused banks could impact markets. We cover BTC news related to bitcoin exchanges, bitcoin mining and price forecasts for various cryptocurrencies. Tony “The Bull” is a level 3 CMT student (passed level 1 & 2), technical analyst, Bitcoin supporter, and avid speculator. Tony is deeply fascinated by core market principles such as Elliott Wave Theory as they tie into mathematics like Fibonacci ratios. Market timing though DeMark indicators, Ichimoku, Gann tools, or Hurst Cycle Theory are also of key interest.

Bitcoin’s sustained rally has emerged at a period market conditions are still dominated by uncertainty stemming from last year’s bear environment. With Bitcoin rallying by almost 40% since the start of the year, investors are still looking for hints likely to dictate the next price movement. Other strategies include using the indicator on different timeframes or modifying one or both moving averages. Bitcoin and other cryptocurrencies were little changed Monday, remaining lower from recent levels amid concerns that pressures on crypto -focused banks could impact markets.

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Many financial experts describe the cross pattern as a signal that hints at an upcoming shift in market trends—from a bullish to a bearish trend. The golden cross that occurred yesterday only amplifies the strength of this breakout and signals the beginning of a long-term bull market. The nearest resistance that the SPX price is now targeting is the $4300 area . During the previous bull market it held as support, and during last year’s declines it rejected the price in August 2022 .

The Central American country that supports digital assets has tightened regulations, which has resulted in this most recent development. In this example, however, the 50-day MA crossed back above the 200-day MA for some time before returning below the 200-day MA. Bitcoin, the world’s largest cryptocurrency by market capitalization, rose 8.86% in the week from Feb. 10 to Feb. 17, trading at US$23,764 at 7 p.m.

Death crosses have mostly indicated very short-term downtrends in the case of gold, making them very unreliable as a tool for making predictions. A couple of times the death cross was indeed followed by a sharp decline—in most cases the death cross was a good buying opportunity. So, to perceive the death cross as a bearish indicator would’ve cost you dearly most of the time. Where we can see this very clearly is with gold—you remember, that analog version of bitcoin? Anyway, on the chart, we can see a death cross taking shape eight times over a roughly 15 year period.

Death Cross vs. Golden Cross

She stays on top of worldwide news about science, government policies, finance, infrastructure, and medical issues. She is always “sniffing the wind” for the latest trends and directions, and keeping her readers abreast of these developments. The S&P also formed a Death Cross in December 2007, just before the global financial crisis. According to Bloomberg, the S&P 500 has formed Death Crosses 25 times since 1970. As an example, let’s look at the S&P 500’s moving average chart, represented by the SPDR S&P 500 ETF . As an example, let’s look at Seeking Alpha’s moving average chart for Microsoft Corporation spanning one year.

In the aftermath of Bitcoin’s 2021 crash, there has been a lot of interest in the death cross and golden cross. As a crypto trader, you should keep in mind that moving averages are lagging indicators and thus have no predictive power. So, whether it’s a golden cross or a death cross, they’re only a strong confirmation of a trend reversal that’s already happened, not one that’s still happening. However, a golden cross and a death cross are considered far more significant when a large trading volume follows them.

Every day we publish the latest news, stories, and content on the financial topics that matter. Tesla also formed a Death Cross when its 50-day moving average dropped below its 100-day moving average on February 15, 2022. Other electric car makers have also shown Death Crosses with NIO Inc.’s appearing on May 24, 2021, and Nikola Corp.’s appearing on Nov. 3, 2020.

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While an uptrend is active, the shorter-term moving average is higher than the longer-term moving average. In a downtrend, the shorter-term moving average is below the longer-term moving average. When trading Crypto charts in real time, MAs offer helpful signals. Additionally, they can be adjusted to 10, 20, 50, 100, or 200-day periods, among others. This article is for information purposes only and should not be considered trading or investment advice.

The token has been closing the past couple of weeks on a bearish note and an additional bearish weekly close may pave way for the bears to slash the prices very hard. Imagine your stock experiencing a long uptrend—sounds great, right? After a while, the stock begins to peak, and enthusiasm on the buying side disappears. In a recent price action pattern study by Cody Hind, the Bullish Pennant was deemed the least reliable price action pattern with only a 54.87% success rate across 200,000 trading platforms.

• As the maiden crypto faces resistance at $23,000, TradingShot, a pseudonymous analyst on TradingView observed that Bitcoin is staring at the dreaded death cross.
• Below zero for a sustained period of time, and the trend is likely down.
• Therefore, a bearish momentum after the death cross is crucial for confirmation.
• A death cross occurs when a short-term MA crosses below a long-term MA.
• Traders may buy the Bitcoin when the MACD crosses above its signal line and Sell, or short, the Bitcoin when the MACD crosses below the signal line.

The circulating supply of Bitcoin is 19,288,937 BTC coins, with a maximum supply of 21,000,000 BTC coins. For calculating the former, analysts use the 50-day moving average. In contrast, to identify the latter, analysts check if the 50-day moving average resembles a 200-day moving average. Inversely, the Golden Cross occurs when the 50-period MA crosses above the 200-period MA, possibly indicating bullish sentiment and future bullish action.

The chart below shows one of the best examples of the golden cross in recent history. After this golden cross, the S&P 500 went on to rally for close to 18 months straight. As you can tell, the 50-day moving average crossed above the 200-day moving average; and the rest is history. Recently the death cross also printed a signal on the bitcoin chart. Again, these death crosses happened quite sometime after the market tops but still went on to push the price down quite a bit.

However, because of the lagging nature of the indicators, it may result in fake signals or being late to the trend shift. As we saw, however, the golden cross has sparked multi-month bullish trends before, so being a few weeks late might not concern you too much. Yes, the golden cross is the opposite of a death cross—it shows us the potential for a trend change to the upside. It happens when a short-term moving average—usually the 50-day—crosses up through a long-term moving average—usually the 200-day. You can use the golden cross and death cross as excellent technical indicators in your trading strategy.

• The popular canine token Shiba Inu managed to escape the formation of the gloomy death cross, which usually indicates that the bears are trying to take long-term control over the cryptocurrency.
• One common variation of the death signal is a 20-day moving average downside cross of the 50-day moving average.
• Now, let us look at the death cross vs. golden cross comparisons to distinguish between them.
• Momentum indicators such as the MACD can also be used for confirmation.
• The death cross occurs when the 50-day moving average drops below the 200-day moving average, indicating a bearish trend.

Furthermore, the report might not be as favorable as some anticipate. https://coinbreakingnews.info//USD and other cryptocurrencies fell as regulatory constraints continued to put downward pressure on the price of digital assets. The former is defined as a shift from a bull market to a bear market, and the latter replicates an opposite shift— from a bearish to a bullish trend. We do have some limited data on what happens after a golden-cross, and it’s mostly bullish.

The death cross is a pattern that isn’t only used with stocks—it’s often used as an indicator in forex as well, for example. You can use it for virtually any asset you want to trade—if you know what it’s telling you. When the shorter-term moving average drifts below the longer-term moving average, a downtrend then starts. An uptrend starts when the shorter-term moving average is above the longer-term moving average. The shorter-term moving average now crosses over the longer-term moving average once the trend reverses.

As such, blindly following one crypto death cross is typically not the best strategy. So you might want to consider other factors when it comes to market analysis techniques. MACD, you’ll easily understand how to trade these crossover signals. The trend reverses, and the short-term MA crosses below the long-term MA. This uses a different formula that puts a higher emphasis on more recent price action. An uptrend starts where the short-term MA stays above the long-term MA.

When trading volumes are higher following the appearance of a Death Cross, it is an indication that investors are selling “into the Death Cross,” confirming the downward trend. The appearance of a Death Cross indicates a decline in short-term momentum and a trend toward lower prices. That trend can last up to one year, but it is not necessarily bad news since lower prices provide the opportunity to buy at discounted prices. In the past, the death cross correctly predicted a bearish signal prior to significant economic downturns in history, such as those in 1929, 1938, 1974, and 2008. On the other hand, the death cross has been known to send out false signals, as it did in 2016.