Bitcoin Continues To Defy Gravity, The Sign Of The Golden Cross.

EanB...n5vb

18 Jan 2024

What was truly going on in the mind of a mysterious and anonymous "character" named Satoshi Nakamoto, no one knows, but his creation: Bitcoin, has defied all expectations, becoming the most valuable, popular and influential digital asset in the world. And although Bitcoin has not had an easy path throughout its history due to the numerous obstacles, challenges and criticisms it has had to face, both from the technical, economic, political and social fields, it continues to demonstrate time and again. again its capacity for resilience, innovation and adaptation. It is ultimately a cryptocurrency that never ceases to surprise us, both for its achievements and its challenges.

Today, when many still doubt the "true value" of Bitcoin, it has coincided with the appearance of a very bullish technical pattern on the price charts, the so-called "Golden Cross". But what is the "Golden Cross" and how is it formed? The "Golden Cross" is a phenomenon that occurs when an asset's 50-day simple moving average (SMA) crosses above the 200-day SMA. This indicates that short-term buying interest is greater than long-term buying interest, which usually precedes strong, sustained uptrends.

Also say that the SMA is an indicator that shows the average of the closing prices of an asset during a given period. For example, the 50-day SMA shows the average of closing prices for the last 50 days, while the 200-day SMA shows the average of closing prices for the last 200 days. The 50-day SMA is considered a measure of the short-term trend, while the 200-day SMA is considered a measure of the long-term trend. When the 50-day SMA is above the 200-day SMA, the asset is said to be in an uptrend. When the 50-day SMA is below the 200-day SMA, it reflects that the asset is in a downtrend. The "Golden Cross" is formed when the 50-day SMA goes from being below the 200-day SMA to being above it. This means that the asset has changed from a downtrend to an uptrend, implying increased demand and optimism among investors.

What does the "Golden Cross" mean for the immediate future of Bitcoin? This "signal" occurred on January 15, 2024, when the cryptocurrency's 50-day SMA surpassed the 200-day SMA on the daily chart. This was the result of a 30% increase in the price of Bitcoin in the previous two weeks, driven by several positive factors, such as the approval of several Bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission. of the United States (SEC), increasing institutional and retail adoption of the cryptocurrency, and improving the technical and security fundamentals of the Bitcoin network.

As I mentioned previously, it is a very bullish sign for the future of the cryptocurrency, since it suggests that the market has entered a new phase of growth and expansion. Historically, Bitcoin's "Golden Cross" has preceded major price rallies in the past. Furthermore, Bitcoin's "Golden Cross" coincides with other technical indicators that point to further price growth, such as the relative strength index (RSI), which measures momentum and overbought or oversold of an asset, and is found at a healthy level, indicating that there is room for further gains without entering overbought territory. Likewise, Bitcoin trading volume has increased significantly in recent weeks, reflecting increased interest and participation in the market.

Let me clarify that while Bitcoin's "Golden Cross" is a very positive sign for the future of the cryptocurrency, it does not guarantee that the price of Bitcoin will rise indefinitely. Like any other technical indicator, the "Golden Cross" is not infallible and may be subject to false signals or delays. Additionally, the price of Bitcoin may be affected by other external factors, such as regulation, competition, innovation, geopolitical events, economic crises, etc.

Therefore, if you are a Bitcoin investor and/or trader, remember to be cautious and not get carried away by enthusiasm or fear, but rather base your decisions on a thorough and balanced analysis of the available data, as well as your own objectives. and risk tolerance. You should also be prepared to deal with the volatility and uncertainty inherent in the cryptocurrency market, which can cause strong price swings both up and down.

Is the "Golden Cross" a guarantee of success or can it be a trap? What can we expect from the price of Bitcoin in the future? There is no definitive answer to this question, since the price of Bitcoin depends on many factors, both technical and fundamental, and is subject to high volatility and uncertainty as I mentioned previously. However, some analysts have made their own projections, based on different models and scenarios. For example, the Stock-to-Flow (S2F) model, created by anonymous analyst PlanB, predicts that the price of Bitcoin could reach $100,000 by the end of 2024, and $288,000 in the current bull cycle, which would last until 2025. This model is based on the relationship between the existing supply of Bitcoin and annual production, and assumes that the price follows an exponential trend.

Another example is the discounted cash flow (DCF) valuation model, which estimates the present value of the future cash flows that an asset would generate. According to this model, the price of Bitcoin could reach $200,000 in 2025, and $500,000 in 2030, if certain conditions are met, such as a 15% adoption rate and a 20% discount rate.

It should be noted that in addition to the "Golden Cross" technical signal there are other fundamental factors that are supporting the increase in the price of Bitcoin. Among them are:

📌 The approval of several Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC), which has opened the doors to greater exposure and liquidity for the crypto asset.

📌 The adoption, for some time now, of Bitcoin as legal tender by El Salvador, which has marked a historical milestone for the cryptocurrency and has encouraged other countries to follow in its footsteps.

📌 The scarcity of Bitcoin supply, which is limited to 21 million units, and which is accentuated by the halving phenomenon, which reduces the reward per mined block every four years.

📌 The growing demand for Bitcoin from institutional, corporate and retail investors, who see in the cryptocurrency a store of value, a means of payment and a way to diversify their portfolios.

Today I read a news story where Jurrien Timmer, an executive who serves as director of global asset allocation at Fidelity, one of the largest fund managers in the world, where he raised his optimism about the future of Bitcoin after the formation of the "Cross Golden". In a tweet posted on January 15, Timmer stated that "...Bitcoin was set to consolidate its recent gains and continue rising amid growing investor demand...". He also shared a chart showing the price evolution of Bitcoin since 2010, highlighting the seven occasions where a "Golden Cross" has occurred. According to the chart, five of those times have resulted in huge bull runs, while the others two have been false signals.

The "Golden Cross" of Bitcoin is an important event that could predict, indicate and highlight a strong change in trend, further reinforced by the increase in optimism in the market for the largest and oldest cryptocurrency in the world. The price has shown impressive strength in recent weeks, driven by these signals and other positive factors. However, this does not mean that the path is easy or linear, as the cryptocurrency market is full of risks and opportunities. Furthermore, it is neither a guarantee of success nor an invitation to complacency, but rather an opportunity to evaluate the potential and risks of Bitcoin, as well as to adapt to new market conditions.

Finally let me remind you that this article is for informational purposes only and does not constitute financial advice. Much to my regret, I do not consider myself a "cryptocurrency expert", but just another user who shares her personal opinions and projections. The price of bitcoin is very volatile and can change quickly due to various factors, therefore, if I can make any recommendation to investors and traders, it is to do their own research, diversify their portfolios and act prudently. Greetings and "GOOD PROFIT" to all.

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