Bitcoin, the world’s most popular cryptocurrency, is currently experiencing a surge in prices due to the hype surrounding the possibility of a Bitcoin ETF (Exchange-Traded Fund) approval. While this is grabbing the attention of investors, there is another key indicator that is flashing bullish, indicating the potential for additional gains.
A Rare Bullish Chart Pattern
After more than 8 years, analysis reveals that the Bitcoin price is showing signs of a rare bullish chart pattern not seen since its monumental rally in 2016. Crypto analyst Moustache notes that a key moving average crossover is in the works, suggesting that Bitcoin might be on the verge of major gains. Specifically, on the 3-week timeframe, Bitcoin’s 21-period exponential moving average (EMA) is attempting to cross above its 50-period simple moving average (SMA). This bullish crossover hasn’t occurred since 2016, a significant event that preceded Bitcoin’s historic surge to its former all-time high of $20,000 in December 2017.
“We all know that $BTC is very much linked to the stock market. The only difference? It often lags behind.” – Moustache
Moustache also highlights Bitcoin’s correlation to stock market indexes, which recently reached their all-time highs. This correlation suggests that Bitcoin could potentially follow suit, albeit with a delay.
The Implications of the Moving Average Bullish Crossover
If Bitcoin successfully confirms the moving average bullish crossover for the first time in 8 years, it could indicate the cryptocurrency’s readiness for substantial upside, despite its current value hovering around $50,000. However, skeptics remain uncertain about the longevity of Bitcoin’s upward trajectory, anticipating that the hype around a possible Bitcoin ETF approval will fade shortly after the regulatory decision expected on January 10.
“If an ETF is approved, the Bitcoin price may experience an initial pump to $48,000-$50,000, but it could later retreat to as low as $12,000.” – Il Capo of Crypto
Despite the doubts, if Bitcoin can demonstrate a convincing bull signal similar to the one observed in 2016, the market sentiment could quickly turn bullish. While the potential regulatory approval of a Bitcoin ETF has been dominating recent headlines, this developing chart crossover could serve as an under-the-radar indicator to monitor.
Some analysts believe that an ETF approval is already factored into the current market prices. Therefore, Bitcoin may require fresh catalysts, such as revived technical signals, to sustain its upward momentum. Regardless of whether the bullish crossover confirms, its emergence highlights the evolving technical picture of Bitcoin compared to the post-Luna crash depression.
It is crucial to keep an eye on Bitcoin’s key moving averages to spot signs of whether 2016’s magic can be replicated.
