By the end of May, Bitcoin at $105,174 is likely to confirm a 'golden cross' on the daily chart, a technical pattern that has frequently appeared before rebounds in recent years.
Add image caption, no more than 140 characters (optional) Source: Benjamin Cowen Previous golden crosses led to BTC price increases of 45-60%. As of May 20, Bitcoin's 50-day simple moving average (50-day SMA; red wave) has closed above the 200-day SMA (blue wave) for the first time since October 2024, forming a golden cross.
Previously, the price of BTC had risen over 60%, with Trump's reelection as U.S. president playing a key role. In October 2023, driven by the Bitcoin ETF frenzy, the BTC price rose by 45% after a golden cross. In September 2021, following a similar SMA crossover, the BTC price increased by 50%.
The golden cross of Bitcoin may fail.
Using indicators that have been effective in the past is not a guaranteed strategy.
Traders learned that in February 2020, Bitcoin's price plummeted 62% before the golden cross, primarily due to the global market crash caused by COVID-19 lockdowns.
This event highlights the importance of using golden crosses alongside broader technical and macro indicators while considering the possibility of unexpected events. As of now, the upcoming golden cross for Bitcoin aligns with most fundamental supports, placing the signal on the bullish side of the ledger. For example, the increase in M2 money supply and easing of trade tensions between the U.S. and China have fueled commitments to Bitcoin reaching new highs.
It is noteworthy that after the Relative Strength Index (RSI) broke the overbought threshold of 70 in early May, BTC issued a correction signal.
Therefore, Bitcoin may not immediately rise after the crossover, but may first retreat to its SMA support level, which, as of May 20, is around $92,400 to $95,000.
The bearish divergence between the rising Bitcoin price and the falling RSI continues to widen, further increasing the likelihood of a short-term decline. Nevertheless, some technical indicators still suggest that Bitcoin's price will rebound to $150,000 in the coming months.