the turning point in the crypto market

Bitcoin has recently recorded its first “golden cross” on a weekly basis, with the 50-week simple moving average (SMA) of its price surpassing the 200-week SMA. 

This marks an unprecedented event in the history of the prestigious crypto. Let’s see all the details below.  

Bitcoin: what does the ‘Golden Cross’ mean for investors?

In market terms, “golden cross” refers to a positive signal for asset prices. Finally, this indicator has emerged in the weekly chart of Bitcoin (BTC) price.

The 50-week Simple Moving Average (SMA) of Bitcoin has indeed surpassed the 200-week SMA for the first time, thus confirming the golden cross.

The expression and its counterpart, “the death cross”, which occurs when the short-term SMA falls below the long-term SMA, have Japanese origins, according to some technical analysis texts.

Many market operators interpret crossovers as prospective indicators, with the ‘golden’ version indicating a long-term bullish market. 

However, the optimistic interpretation could be questioned, as averages are based on historical data and tend to lag behind current prices. 

In other words, averages reflect what has happened in the past, and the first weekly golden cross resulted from a price increase of over 70% to $42,700 in four months.

As a result, experienced traders consider crossovers as lagging indicators, often coinciding with the slowing down of the trend. An example is the confirmed weekly death cross at the beginning of 2023, which marked the lowest point of the bearish market. 

Bitcoin crossovers and post-launch ETF declines

The daily crossovers of the ‘golden’ and ‘death’ Bitcoin chart show a mixed record in predicting bullish and bearish trends.

The Bitcoin rally has already lost momentum, with the cryptocurrency trading down 10% from the highs near $49,000 recorded after the launch of 11 spot exchange-traded funds (ETFs) in the United States last week. 

According to observers, bullish enthusiasm has decreased due to the market’s unrealistic expectations regarding the initial flows of ETFs.

Greg Cipolaro, Global Head of Research at NYDIG, stated the following in a recent newsletter: 

“The net flow of funds for ETFs was $965 million (including seed funds), a good start so far. However, the spot price has dropped compared to the launch-driven euphoria, as investors set unrealistically high launch expectations.”

Gensler and O’Leary’s opinions on Bitcoin ETFs

Recently, the President of the SEC, Gary Gensler, sarcastically commented on the approval of spot Bitcoin ETFs.

Specifically, he stated that these financial instruments challenge the decentralization principles of Bitcoin, giving it a centralized nature. 

Gensler warned that this decision could intensify speculation and volatility in an already unstable market. He also emphasized the highly speculative nature of Bitcoin, often associated with illicit activities such as money laundering and ransomware.

In addition, Gensler quoted the words of Satoshi Nakamoto, the creator of Bitcoin, emphasizing in his opinion the irony in defining this week as “historic” when it comes to centralization and traditional financial means.

It has indeed highlighted the possibility for investors to express themselves in Bitcoin through centralized financial instruments such as ETFs, breaking with the original concept of decentralization.

Parallelly, the well-known investor Kevin O’Leary has expressed skepticism towards Bitcoin spot ETFs. He has raised doubts about their value for long-term investors like him, who consider Bitcoin as digital gold.

O’Leary’s concerns are about the high fees of ETFs and the lack of direct ownership, aspects that may not satisfy purists who prefer direct ownership of Bitcoin.

O’Leary has anticipated that only a few of the recently approved ETFs will be successful, with prominent players like BlackRock and Fidelity likely to dominate thanks to their considerable resources.

O’Leary finally emphasized that, for those who hold Bitcoin long-term as digital gold, purchasing ETFs doesn’t make sense, considering them useless and without added value due to the fees.