Golden cross continues to widen

The golden cross formed in BTC futures between the 50 and 200-day moving averages has not only remained but the gap between the two continues to widen. This is a very bullish technical indicator however it can suggest a market is overbought. Still it has much more room to widen just take a look at the gap of $4,000 between the two moving averages after the first and only other golden cross of this kind in Bitcoin futures.

Let’s compare how these two (50, 200) moving averages have acted similar in gold futures and what this can tell us about the future movement of Bitcoin.

In 2011 after gold hit its all-time high of $1,900 and was oscillating around $1,800 the gap between the two moving averages was $220. Two years later when gold was about $600 lower the averages were about $220 in the other direction meaning the 200-day had crossed over the 50-day and the gap widened to the same distance apart before gold started trading sideways. Currently in gold futures the gap is once again in a bullish alignment with the shorter term moving average above the longer and the gap between them has widened to $180. What this tells us is that gold has not yet reached critical mass and has more upside potential.

In bitcoin futures a year after their start the correlation between the two moving averages was bearish and the gap nearly $3,500. A year later the correlation was a bullish one and the gap had swelled to $4,000. As of now the gap remains bullish nut only $500 separates the two and we can view this in two ways.

One is if the gap does not continue to widen then we are still entrenched in a period of sideways trading activity. Two if it does continue to widen then we have left sideways movement and will see this gap swell by as much as $3,500 more. If the gap does continue to widen we must take note of is that in both gold futures and in Bitcoin futures the gap was at its widest point AFTER hitting their all-time highs.