With all eyes on the Bitcoin market right now as the technical indicators are signaling the potential formation of a golden cross. According to Julien Duval, a golden cross is a bullish breakout pattern. In technical terms, it occurs when a shorter-term moving average, typically the 50-day SMA, crosses above a longer-term moving average such as the 200-day SMA. It’s a signal usually read as an indicator that a bear market is about to make a move to a bull market trend.

Julien Duval explains, the golden cross is perhaps the most famous of all bullish formations in technical analysis. It’s usually a precursor to one of bitcoin’s epic bull runs. The indicator generally unfolds in three stages: first, a downtrend bottoms out as buyers step in and overpower sellers. The second shorter moving average crosses below the other longer moving average to confirm downward trend reversal. The prospect of this crossover has many crypto traders and investors alike wondering whether Bitcoin is due for its next major breakout.

As CoinTelegraph’s Julien Duval points out, BTC’s track record after previous golden cross setups is pretty hard to ignore. Since the 2023 50/200 SMA golden cross, the SMA has generated three false signals. Each of those occasions led to tremendous percentage increases of 49%, 125%, and 68% respectively. Back in October 2020, a golden cross preceded a parabolic rally in Bitcoin’s price. Fueled largely by the excitement surrounding the expected approval of Bitcoin ETFs, the leading crypto asset surged, marking an incredible 45% increase. Incidentally, that was the same gain in Bitcoin’s price in September 2021 following a similar SMA crossover. Such past performances understandably create excitement with every new golden cross to speculate how it could potentially affect Bitcoin’s price.

Bullish Signals: A Perfect Storm?

Several technical indicators support the bullish outlook. Others, taking a cue from the same historical precedent, are forecasting the same exact type of rally – up toward $150,000 – in the next few months. The most bullish projections have Bitcoin rising all the way up to $229,000. If it were to pull this off, that’d be an incredible 118% increase from its present valuation. Even that more conservative estimate still suggests a 44.7% increase is likely, taking the price to $152,000.

Most long-term Bitcoin holders are staying out of the market for major spending on balance, which is a historically bullish signal. Shipping Class Coinbase Premium Index The Coinbase Premium Index is currently positive. This means that US investors have robust demand for Bitcoin even at higher prices than those on other exchanges. Fundamentally, Bitcoin is still undervalued. The MVRV Z-score, a tool to determine if Bitcoin is overvalued or undervalued, is healthy. Furthermore, improving Coin Days Destroyed (CDD) momentum shows that profit taking is more selective and not driven by panic selling. The Relative Strength Index (RSI) printing above the key 50 level is a bullish sign, confirming the increasing bullish momentum.

As Julien Duval is often quick to remind, it’s important to keep in mind that the market never goes in a straight line. While these indicators are rosy, there are storm clouds brewing that could rain on the rally many are expecting.

Bearish Clouds: Whale Activity and Geopolitical Risks

Despite the bright technical prospects, potential bearish catalysts may rain on the bullish parade. One of the biggest worries continues to be the movement of Bitcoin whales, who own large quantities of the crypto asset. Whale transactions, particularly large OTC sales, have the capability to impact market sentiment and may even act as the catalyst for a loss in investor confidence.

Whale actions contribute to rising price volatility, particularly when they touch off a huge net movement through one transaction of a single cryptocurrency. Additionally, as we’ve established, whales can have more of a liquidity impact at a higher scale, especially those with 100-10,000 bitcoins in their possession. A more recent example of this is the new Bitcoin whale that sold off over 11,400 Bitcoin in under 4 months. Though this aligned with a price rebound for Bitcoin, this shows upward turning into downward pressure.

Geopolitical Risks: The Wild Card

Escalating geopolitical uncertainties pose another significant risk. Terror attacks and geopolitical tensions between major countries are two events that can very rapidly create a sense of risk aversion. These factors frequently cause dramatic turns moments in the cryptocurrency market. As a case study, existing literature demonstrates that, unsurprisingly, terror attacks affect stock-market returns and volatility within G7 advanced economies. These events are likely to have strong effects on Bitcoin returns as well. Escalating tensions between major countries can create uncertainty about global trade and economic stability, leading to higher volatility in Bitcoin prices. When the world gets unstable, such as when geopolitical tensions increase, investors tend to become jittery. This change in sentiment can cause Bitcoin prices to be extremely reactive as they chase the unsure market.

Navigating the Uncertainty: Key Levels and Strategies

The month ahead by Julien Duval Follow price action closely— Keep an eye on important price levels and remain prudent.

  1. Watch Key Price Levels:
    • $110,000: Bitcoin has recently surged above this level, surpassing its previous record, making it a crucial support level to watch.
    • $120,000: This is a bullish price target based on bars pattern analysis. Maintaining momentum above $110,000 could pave the way for a test of this level.
  2. Implement Risk Management Strategies:
    • Diversification: Don't put all your eggs in one basket. Diversify your portfolio across different asset classes to mitigate risk.
    • Stop-Loss Orders: Use stop-loss orders to limit potential losses if the market turns against you.
    • Position Sizing: Carefully size your positions to avoid overexposure.

It should be remembered that the market environment today requires a very sober approach. The golden cross and other bullish signs suggest gains are on the horizon. We should not ignore the threats posed by underwater whale action and global diplomacy. Traders and investors alike can better chart a course through the market waters with the help of these major price levels. With strong risk management strategies in place, they can take advantage of opportunities while safeguarding their capital.