Bitcoin forms a “Golden Cross” pattern on the technical charts suggesting a bullish price actions going ahead.
The world’s largest cryptocurrency Bitcoin (BTC) has been consolidating around $34,400 levels recently with the Bank of Japan (BoJ) recently deciding to soften its grip on the “yield curve control” program.
On Tuesday, the central bank maintained the short-term policy rate at -0.1%, preserving its policy of negative interest rates. Nevertheless, the BOJ indicated that it would view the 1% upper limit for the 10-year government bond yield as a “reference” rather than an inflexible limit.
This adjustment will permit greater fluctuations in yields and reduce the need for the BOJ to intervene with bond purchases aimed at injecting liquidity every time the 10-year yield approaches the previous hard cap of 1%.
Bitcoin holds the tendency to mirror shifts in global fiat liquidity, with the BoJ’s Yield Curve Control (YCC) serving as a vital source of liquidity since 2016. According to certain analysts, the Bank of Japan’s recent adjustment seems a subtle departure from the accommodative YCC program. This shift warrants prudence for traders involved in liquidity-sensitive risk assets, such as cryptocurrencies.
Bitcoin ‘Golden Cross’ Ahead
Now, let’s delve into the weekly chart for a more extended view. Bitcoin has grappled with a bear market for a duration of two years, commencing with its descent from an all-time high of $69,000 in November 2021, sparked by signals from the Federal Reserve hinting at a shift in monetary policy.
Throughout this period, the cryptocurrency reached its lowest point in the vicinity of $16,000 but has embarked on a gradual recovery over the past year.
An examination of Bitcoin’s peaks and valleys during these two years reveals that the Fibonacci 0.236 level has transformed into a support as of the previous week. According to this analysis, we identify the next hurdle around the $36,500 range, corresponding to the Fibonacci 0.382 level. Consequently, Bitcoin’s assessment, both in the short and long term, designates the $35,500 – $36,500 range as a critical resistance zone.
With a successful breach of this price range, Bitcoin‘s long-term outlook appears to target the $42,000 mark. Of particular note is the promising development related to the medium and long-term Exponential Moving Averages (EMA), which recently exhibited an upward crossover, signaling a bullish trend.
A noteworthy aspect of the Bitcoin chart relates to the positions of the 50-day Moving Average (MA) and the 200-day MA. In September, Bitcoin faced a “Death Cross” when its 50-day MA slipped below the 200-day MA, traditionally a precursor to more significant price declines.
However, the negative sentiment was averted as buyers successfully upheld Bitcoin’s value above the $25,700 support level, enhancing optimism for future prospects. Moving into October, Bitcoin has shown a shift in momentum and is now on the verge of forming a “Golden Cross,” signifying a positive crossover at crucial moving averages.
While the technical indicators suggest a robust rebound, the potential for a “Golden Cross” effect may outpace the impact of the “Death Cross,” positioning the largest cryptocurrency to continue its upward trajectory as long as it maintains support at short-term levels.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.