Golden Cross Looms for Bitcoin as USDT Backs the Signal

Bitcoin is on track to flash one of the oldest bullish signals in financial markets - the golden cross. This signal occurs when a short-term average of an asset's price, calculated over the last 50 days, rises above the average price over the last 200 days.

The golden cross has been widely criticized for being based on moving averages, which lag behind price movements. As such, the signal often shows up after much of the move has already happened.

Bitcoin's own history with the golden cross is mixed. Since 2012, the cryptocurrency has formed this exact pattern 12 separate times.

Of these 12 instances, three delivered big gains: a 306% increase in the first year after the signal was triggered in February 2012, a sustained gain over two years following a golden cross in October 2015, and a 312% gain in the year after a May 2020 signal.

However, other crosses were quickly invalidated by a death cross within just two months. A recent September 2021 signal barely moved at all before dying out shortly before bitcoin fell more than 70% from its highs over the following year.

The average gain across nine golden crosses where a three-month return could be measured was 24.9%, but only three of the twelve crosses survived a full year without being broken by a death cross first, with an average 12-month gain of 250%.