Bitcoin, XRP and Ethereum (three of the most dominant coins in the cryptocurrency market) are simultaneously forming a three-day golden cross.
This signal is rare and has only occurred a few times in the past on individual assets. However, all three major cryptocurrencies have never triggered this signal at the same time. What does all this mean, and what happened to the three-day Golden Cross?
Bitcoin, XRP, Ethereum Lead Market Recovery
The outlook for the cryptocurrency market is not as bleak as it was just a few weeks ago, between BlackRock and other institutions aiming to launch Bitcoin ETFs, and the big wins of XRP and Ripple against the US Securities and Exchange Commission (SEC).
The technical environment is also starting to show signs of an uptrend. Notably, several top cryptocurrencies are edging closer to the golden cross over the three-day timeframe, although this has only happened a few times in the past.
This is happening simultaneously for the first time in the history of Bitcoin, Ethereum and XRP. Previously, these signals would have arrived at various stages of the previous bull market. It wasn’t until all three coins made a golden cross that the stronger rally began.
Never before has all three fired at the same time
It will also be the 3rd ever for BTC and XRP and the 2nd ever for Ether. pic.twitter.com/bzVfK3ZpBp
— Tony “The Bull” (@tonythebullBTC) July 19, 2023
What is the cryptocurrency golden cross?
A golden cross occurs when the higher timeframe moving average (usually a 200 period MA) crosses the lower timeframe moving average (usually a 50 period MA) from bottom to top. In contrast, the cross of death occurs when the two cross from top to bottom.
These crossovers generate buy or sell signals in a moving average based trading system. Such systems are designed to capture most of the trend, but tend to miss much of the early part of the uptrend waiting for confirmation.
The 3-day golden cross throughout the years | BTCUSD on TradingView.com
Moving Average Crossovers: How Do Signals Stack Up?
Bitcoin was the only signal in 2019 to suffer a drawdown. In all other cases, buy signals using only simple moving average crossovers yielded significant gains with limited downside. In 2015, his 3-day golden cross on BTCUSD gave him an ROI of over 2,000% before crossing back and issuing a corresponding sell signal. XRP’s golden cross to death cross held over 9,000% of its uptrend profit. However, due to poor price history, Ethereum never issued a signal at the time.
In 2019, Bitcoin misfired, followed by a long drawdown that stalled buy signals. Neither XRP nor Ethereum sent a signal until 2020, when the entire crypto market began to come together. The 2020 ETHUSD Golden Cross maintained his ROI of over 1100% until the death cross closed the position. XRP failed to hit new all-time highs, but the Golden Cross still posted a 200% ROI.
Bitcoin experienced a drawdown at the beginning of 2019, but the buy signal was still valid in the end, sustaining a 550% ROI before the position was closed by a death cross. Across his five buy signals in the past, his ROI averaged 2,570% when golden crosses occurred. While such returns are unlikely in the future, this suggests the signal is valid.