Bitcoin Golden Cross Approaches: The 12 Previous Instances That Call for Caution

Two moving averages, one crossover, and a market holding its breath. Bitcoin is approaching a new golden cross, a chart signal often seen as a precursor to a sustained rise. However, its history remains mixed: some occurrences have preceded spectacular surges, while others have been quickly reversed.

This time, a second indicator reinforces the bullish reading. The dominance of USDT, which measures Tether's share in the total crypto market value, is nearing a death cross. Two seemingly opposing signals, but they tell the same story: Bitcoin is accelerating while stablecoins weigh less in the overall market.

Key Points {#h-key-points}

• The golden cross forms when Bitcoin's 50-day moving average crosses above its 200-day moving average.
• The signal has previously failed, notably in February 2020, just weeks before the Covid crash.
• Each USDT created corresponds to dollars entering the market: the supply of stablecoins serves as a liquidity gauge.
• Between May and December 2022, USDT's market cap fell from $83 billion to $65 billion, during Bitcoin's decline.

The golden cross refers to the moment when the 50-day moving average crosses above the 200-day moving average. The former reflects the recent price dynamics, while the latter summarizes its underlying trend. When the short-term average moves ahead of the long-term one, traders generally see it as a sign that a bullish trend is establishing itself.

Since 2012, Bitcoin has recorded twelve comparable golden crosses. Three have preceded major increases. The one in February 2012 was followed by a 306% rise within a year. The signal from October 2015 remained active for over two years, until the peak near $19,800 reached in December 2017. Finally, the one in May 2020 preceded a 312% increase over twelve months.

Others have proven much less convincing. The crossovers in July 2014 and July 2015 were reversed by a death cross less than two months later. The one in September 2021 produced only a 1.5% increase before disappearing, shortly before a drop of over 70% in Bitcoin.

Of the nine occurrences for which a three-month performance can be calculated, the average increase still reaches 24.9%. However, only three of the twelve signals survived for a full year. Their average return over this period reaches 250%, proving that lasting crossovers are rare but potentially powerful.

The dominance of USDT corresponds to the total value of tethers in circulation relative to the total market cap of the crypto market. When it decreases, it means that assets like Bitcoin and altcoins are gaining more weight against the main stablecoin in the market.

This decline is often interpreted as a signal of risk appetite. However, it does not prove that investors are selling their USDT to buy cryptocurrencies: the ratio can also decline simply because risky assets are rising faster than the supply of stablecoins.

Last November, USDT dominance formed a golden cross before rising, while Bitcoin began to decline. The ratio is now approaching the opposite signal: its 50-day moving average could fall below the 200-day one.

Thus, the possible golden cross of Bitcoin and the potential death cross of USDT dominance converge towards the same bullish reading. They show a recent strengthening of Bitcoin and a decrease in the relative weight of stablecoins. However, their history requires considering them as a confirmation of trend, and not as a guarantee of the market's future direction.