Bitcoin's Golden Cross Trap: Will Price Break Above 50-Week Average?
Bitcoin's recent surge to $81,280 has analysts worried about a potential 'golden cross' trap. The price increase, which saw Bitcoin gain around 4% over the past 24 hours, is being driven by speculation surrounding future interest rates and a chart pattern known as the golden cross.
The golden cross occurs when the 50-day moving average crosses above the 200-day moving average, but according to Benjamin Cowen, this indicator has led to price declines in the past. In fact, during the first half of September, Bitcoin experienced a local pullback after forming a similar pattern.
Cowen notes that there are two possible outcomes for the current rebound: either a bullish scenario where Bitcoin manages to recover from the post-cross sell-off and stage a rally, breaking the back of the bear market; or a bearish scenario where the price faces rejection at current levels, forming a lower high and continuing the broader bear market.
The key indicator for determining which outcome will prevail is the 50-week simple moving average (50W SMA), with weekly closes above this level signaling a genuine reversal of the trend. Cowen advises traders to monitor price action around this level carefully, as it may indicate whether the current rally is a trap or a genuine turning point.