As global markets recover, Bitcoin and numerous digital assets have hit their first serious resistance point as the mid-term moving averages emerge as the trend defining point.
Bitcoin Trading Above $42,500
At the time of writing, according to CoinMarketCap, Bitcoin is trading at $42,508 a little the $43k resistance line. The digital gold has hit the 50-day exponential moving average, which acts as a hurdle for trading assets in both downtrends and uptrends. Whenever an asset breaks through a resistance point, it tends to continue to rise.
According to the asset chart, Bitcoin last tested the above support in early December 2021. The last test was unsuccessful, causing the cryptocurrency to fall below $50,000.
The Golden Cross
The Golden Cross forms when the 50-day moving average (MA) of an asset’s price spikes above the 200-day MA and is indicative of recent buying pressure which causes the long-term average price to rise above the short-term average price.
Previously, the indicator provided us with one of the strongest existing market signals – the crossing of the 200-day and 50-day moving averages, which usually signal a change in the long-term trend.
The most recent “death cross” occurred on Jan. 10, sending Bitcoin to a local low of $32,950. The reversal of the indicator is expected to happen if Bitcoin retraces and reaches the zone above $50,000.
The 50-day moving average was last tested in July 2021 in downtrend conditions and acted as a catalyst for Bitcoin to reach local highs of $52,000. On the other hand, the last “Golden Cross” happened in August near the local peak.
Bitcoin has failed to break above resistance due to the lack of strong buying volume in the market. According to historical data, every break of resistance is followed by an increase in volatility.