Taking to X on January 30, a crypto analyst has painted a bullish picture for altcoins, citing the formation of a golden cross pattern on the two-week chart. The golden cross is a technical arrangement often associated with bull runs. This pattern, formed when the 50-day moving average exceeds the 200-day moving average, suggests that market momentum is shifting from short-term selling to long-term buying.
Golden Cross Forms, Altcoins Ready To Rally?
This development is particularly noteworthy as it’s the first time a golden cross has formed since 2020. The last time this pattern was printed was in 2016. Then, altcoins like Ethereum, XRP, and Dogecoin surged, posting relieving higher highs.
In this preview, the analyst highlights the cyclical nature of the crypto market. Specifically, the analyst emphasized that golden crosses have preceded major altcoin rallies in 2016 and 2020. With the pattern forming again, the analyst believes history may repeat itself, paving the way for another altcoin bull run in 2024.
Still, traders should be cautious. The crypto market remains a relatively new asset class that’s volatile. At the same time, the analyst relies on technical indicators. In this case, the golden cross pattern forms from two moving averages.
Technically, moving averages rely on past price points and don’t show current data. As such, they can provide misleading signals. For this reason, traders reliant on this signal might have to depend on other technical indicators for confirmation.
Bitcoin Remains Dominant
How altcoin prices will react in the days ahead remains to be seen. When writing on January 30, the cumulative altcoin market cap stands at over $806 billion, according to CoinMarketCap.
Notably, the altcoin total market cap has been choppy and moving sideways. This sideways movement signals that traders and investors are not ready to double down on top altcoins despite the formation of the golden cross.
Besides the market cap moving horizontally, Bitcoin is still dominant, controlling over 51% of the total crypto market cap. As it is, this dominance, though fluctuating occasionally, might not change anytime soon.
Bitcoin is the only asset the United States Securities and Exchange Commission (SEC) has endorsed as a utility. Recently, the strict agency approved multiple spot Bitcoin exchange-traded funds (ETFs), allowing Wall Street players to get involved.
Amid this, the SEC is also assessing several applications submitted by, among others, Fidelity, looking for the approval of a spot Ethereum ETF. The chairman of the SEC, Gary Gensler, is yet to provide clarity on ETH.