Bitcoin, XRP, and Ethereum are making waves in the cryptocurrency market as they are poised to form a 3-day golden cross simultaneously. This is an extremely rare occurrence, as each individual asset has only triggered this signal a few times in the past. However, this is the first time all three major cryptocurrencies are crossing at the same time. But what does this mean exactly, and what are the potential outcomes of the 3-day golden cross?
The recent outlook of the crypto market has been less bleak compared to previous weeks. The involvement of institutions like BlackRock seeking to launch Bitcoin ETFs and the favorable ruling for XRP and Ripple against the US Securities and Exchange Commission (SEC) has played a significant role in this positive shift. Additionally, the technical environment is showing signs of a possible uptrend, with several top cryptocurrencies inching closer to a golden cross in the 3-day timeframe, a rare occurrence in the past.
Bitcoin, Ethereum, and XRP are about to experience this phenomenon simultaneously for the first time in their history. In previous bull markets, these signals occurred at different stages, but it was only when all three coins experienced a golden cross that a stronger rally ensued. This convergence of golden crosses among the top three crypto assets has never happened before, making it an intriguing and potentially game-changing event.
A golden cross takes place when a higher timeframe moving average, typically a 200-period MA, crosses above a lower timeframe moving average, usually a 50-period MA, from below. Conversely, a death cross occurs when the two moving averages cross down from above. These crossovers generate buy or sell signals in moving average-based trading systems, which aim to capture the majority of a trend.
Interestingly, the buy signal generated by the golden cross has proven to be highly profitable in the past, with limited downside. The only exception was in Bitcoin in 2019, where the signal suffered a drawdown. However, in all other instances, the simple moving average crossover produced significant returns. For example, in 2015, the BTCUSD 3-day golden cross yielded over 2,000% ROI before the corresponding sell signal. XRP’s golden cross preserved more than 9,000% of the uptrend’s gains, while Ethereum had insufficient price history to trigger a signal.
In 2019, Bitcoin experienced a misfire with an early buy signal that led to a prolonged drawdown. On the other hand, XRP and Ethereum did not trigger signals until 2020 when the entire crypto market began rallying together. The 2020 ETHUSD golden cross secured over 1,100% ROI before the subsequent death cross. Despite not reaching a new all-time high, XRP’s golden cross still delivered 200% ROI.
Although Bitcoin’s 2019 buy signal endured a drawdown, it ultimately proved effective and retained 550% ROI by the time the death cross closed the position. Looking at the five historic buy signals, an average ROI of 2,570% was observed when a golden cross occurred. While similar returns may not be expected in the future, this data suggests that the golden cross signal holds merit.
The simultaneous formation of a 3-day golden cross in Bitcoin, XRP, and Ethereum is a significant event in the cryptocurrency market. This rare occurrence has never happened before and could potentially pave the way for a stronger rally. Based on historical data, the golden cross signal has shown profitability, although individual results may vary. Cryptocurrency enthusiasts will be closely monitoring these developments to see how the market responds to this unprecedented event.
