Main aspects:
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The golden cross is interpreted as confirmation of an uptrend.
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The SEC has until Wednesday to announce whether it approves or rejects spot bitcoin ETFs.
The SEC’s time is up. This body, which is the regulator of the stock market in the United States, has until January 10 to announce whether or not it approves bitcoin (BTC) spot ETFs. This means that the long-awaited news will be given between Monday and Wednesday of the current week.
The market, as reported by CriptoNoticias, is largely optimistic. Both the SEC and the companies seeking approval to launch bitcoin ETFs (there are more than a dozen requests) have given signals that the decision would be positive and, therefore, the ETFs would be approved.
In this context, the price of bitcoin reacted upwards. And for the first time, at least since BTC has been listed on the main stock exchanges, they formed a golden cross (or golden cross) on a weekly basis. This technical analysis pattern occurs when the 50-period moving average crosses above the 200-period moving average.
As can be seen in the following chart, provided by TradingView, bitcoin closed the first week of 2024 at $42,931. The green line is the 50-week fast moving average, while the blue line is the 200-week slow moving average.
Bitcoin price with candles on a weekly basis. Source: TradingView.
What does a golden cross mean in technical analysis?
The appearance of a golden cross serves as confirmation of the trend. When a fast (short-term) moving average rises above a slower (long-term) one, it implies that recent prices are rising at a faster rate than in the past. This is interpreted as a sign of strengthening market uptrend.
Beyond the technical aspects, The golden cross also plays an important role in market psychology. Being a well-known and widely observed model by investors and Merchants, can generate a psychological effect that attracts more buyers, which in turn can push the price of BTC even higher. This response reflects how perceptions and expectations can influence the behavior of market participants.
For greater precision in analysis, analysts often seek validation of the golden cross with other technical indicators. Confirmation through these additional indicators helps validate the strength and reliability of the uptrend suggested by the golden cross.
This is worth clarifying Confirmation of an upward trend does not imply that there cannot be downward corrections. In fact, many believe that, if ETFs were approved (and after a probable initial “rise”), the price of bitcoin would then fall, as the phenomenon known as “buying the rumor and selling the news” would occur.
Also Something different could happen this time, especially if bitcoin ETFs perform well in the first few days of trading on the stock exchange..
Since these are spot ETFs, issuing companies must own units of the underlying asset (e.g. bitcoin) to back them. If there is a lot of demand for these financial products, then there will be massive purchases of BTC by BlackRock, ARK, 21Shares, Grayscale or any company that has a bitcoin ETF on the market. If this happened, due to the simple law of supply and demand, the price of the good would tend to increase.
2024-01-08 00:10:07
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