Bitcoin, XRP, and Ethereum — three of the most influential coins in the cryptocurrency market — are on the brink of forming a 3-day golden cross simultaneously. This has never happened before with all three of these major cryptocurrencies. So, what does this signal mean? And what results can we expect?
The crypto market outlook is improving, with BlackRock and other institutions seeking to launch Bitcoin ETFs, and the recent win for XRP and Ripple against the US Securities and Exchange Commission (SEC). Even the technical environment is beginning to show signs of a possible uptrend. Specifically, several top cryptocurrencies are close to a golden cross on the 3-day timeframe, which has only happened a few times in the past.
This is about to occur in Bitcoin, Ethereum, and XRP all at once. Previously, these signals arrived at different phases of previous bull markets. It was only when all three coins golden crossed that a stronger rally began. Tony “The Bull” tweeted: “Three top crypto assets — #Bitcoin, Ethereum, and #XRP — are on the brink of a golden cross on the 3-day timeframe. All three firing at the same time has never happened before.”
So, what is a golden cross in crypto? A golden cross occurs when a higher timeframe moving average, usually a 200-period MA, crosses above a lower timeframe moving average, typically a 50-period MA, from below. This creates a buy signal in a moving average-based trading system.
How does the signal stack up? Except for Bitcoin in 2019, the buy signal has been profitable with limited downside every other time. For example, in 2015, the BTCUSD 3-day golden cross yielded a 2,000% return on investment (ROI) before crossing back down. XRP’s golden cross to death cross kept more than 9,000% of the uptrend’s gains. Ethereum never fired a signal at that time, because of its lack of price history.
In 2019, Bitcoin had its misfire where the buy signal then sat through a long drawdown. But the signal was still ultimately effective and retained 550% ROI. The average ROI across all five buy signals was 2,570%. Although these returns may not be likely in the future, it shows that the signal can be effective.
