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Bitcoin’s recent golden cross, where the 50-day EMA crossed above the 200-day EMA, has historically been seen as a bullish milestone. However, the market didn’t waste any time pulling back, and BTC has already dropped from highs around $112,000 to test trendline support just above $107,000. The sharp retracement has some traders worried, but here’s why this “golden cross dump” is pretty normal, and why it may actually be healthy for the next leg of the rally.
As of right now, analysts concur that this price action is textbook and follows a golden cross. As one commenter stated, "At this point it appears that Bitcoin will continue to decline after the golden cross." It might linger for a few days before rebounding sometime the following week. Although the 50/200 EMA cross indicates a bullish long-term trend, traders frequently lock in gains from the previous run with a short-term washout.
Both the price and volume are still above important support levels, particularly the $102,000 breakout zone. Although momentum has cooled, it hasn't collapsed, according to the RSI, which is currently at 69 after cooling off from near-overbought conditions. Another indication that this could be a healthy dip rather than a complete reversal are the retracements occurring on declining volume.
Analysts have questioned if this move increases their level of optimism. To put it another way, the bullish structure that has been established since Bitcoin broke $100,000 is not broken by the anticipated short-term consolidation.
The golden cross is still indicating a more general bullish environment, even though it may have lost some of its luster in the short term. Resetting leverage and preparing for the next leg are opportunities presented by pullbacks such as this one. The golden cross remains valid as long as Bitcoin remains above the $102,000-$105,000 range; it is simply undergoing the shakeout that it typically requires prior to a significant breakout.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team