Bitcoin Golden Cross Emerges – Is a $65K Breakout on the Horizon?

The recent appearance of a Bitcoin Golden Cross has traders buzzing with excitement, raising the question: could Bitcoin (BTC) finally break through the critical $65K resistance level?

After a week marked by intense bullish sentiment, Bitcoin has successfully pushed past the looming bearish pressure, achieving a recent daily peak of $64,825. This level has been revisited multiple times since BTC's all-time high (ATH) of $73K reached in March. However, in August, the bears came back strong, halting a potential surge towards $68K.

Currently, BTC is trading at $63,687 following yet another unsuccessful attempt to establish solid support. What changes are essential for a breakout to occur?

Golden Cross: A Cautionary Tale

On the daily price chart, we see that Bitcoin’s 50-day moving average (50-DMA) has crossed above the 200-day moving average (200-DMA), signaling what technically is a Golden Cross. This pattern has historically served as a reliable harbinger for bullish market trends, suggesting that when the short-term average overtakes the long-term one, a significant price increase often follows.

However, during the last weeks of August, the short-term moving average got perilously close to the long-term average, teasing the possibility of a bull rally. Unfortunately, a resurgence in short positions thwarted this crossover, leading the market into a sharp rejection and dropping BTC to the crucial $55K support range.

If this scenario repeats itself, there’s potential for a Death Cross to emerge, which historically signals a bearish downturn. So, what needs to change for this bullish trend to gain momentum?

Control of Short Positions Must Turn

Typically, traders have interpreted a Golden Cross as a robust signal to go long, anticipating upward price trajectories. However, recent analyses by AMBCrypto indicate that while a surge in Open Interest (OI) frequently accompanies Bitcoin at critical resistance thresholds, a troubling pattern has emerged: these peaks are often followed by traders closing their long positions, resulting in dramatic price drops for BTC.

Despite the recent influx of long positions as Bitcoin bulls attempt to push past the $65K barrier, short control remains a potent threat. If this pressure continues, it could lead to a significant liquidations wave, potentially dragging BTC back below $60K before any breakout efforts can succeed.

What’s Next for Bitcoin?

Recent studies indicate that on the monthly timeframe, the Relative Strength Index (RSI) has dipped below 80%, which may signal a looming short-term price correction. A declining RSI typically paves the way for renewed buying interest, as traders often view such oversold conditions as opportunities to snag assets at lower prices. Historically, these RSI drops have prompted upward corrections during bullish phases, encouraging investors to act on perceived bargains.

While this could increase the chances of the Golden Cross manifesting in the near future, the market must aim to lower Open Interest by at least 10% to mitigate short control risks effectively. Without this adjustment, while BTC may hover above $64K in the short term, the road to $65K remains uncertain.

The ongoing fluctuations in Bitcoin's price dynamics emphasize the need for careful monitoring and responsive trading strategies in this ever-evolving crypto landscape. As the landscape shifts, will Bitcoin finally cross the golden threshold, or will the bears take back control?