Bitcoin Nears Key Golden Cross as USDT Emerges as the Signal to Watch

Bitcoin is approaching a golden cross, a long-established technical indicator that could signal further upside. However, BTC’s history with the pattern is mixed, while the latest move in USDT dominance offers another reason for traders to watch the setup closely.

BTC was trading near $79,639.16 as its 50-day moving average moved toward a crossover above the 200-day average. The resulting formation, known as a golden cross, is generally viewed as a sign that shorter-term momentum is overtaking the longer-term trend.

There is no special mathematical reason for using 50-day and 200-day averages. The two time frames became widely accepted after decades of use in traditional financial markets and were eventually adopted by cryptocurrency traders.

The indicator also has an inherent drawback. Moving averages react to previous price movements, meaning a golden cross can appear only after a rally is already well underway. That makes it more of a confirmation tool than a reliable early predictor.

Bitcoin’s Track Record

BTC has formed 12 golden crosses since 2012, but the results have varied considerably.

Some produced major rallies. The Feb. 9, 2012, crossover preceded a 306% gain over the next year. Bitcoin’s October 2015 golden cross remained intact for more than two years and accompanied the cryptocurrency’s climb to nearly $19,800 in December 2017.

The May 2020 signal was another standout. Bitcoin gained 312% over the subsequent year and later rose to almost $64,900.

Other signals quickly failed. The golden crosses in July 2014 and July 2015 were both followed by death crosses within two months.

Several later crossovers initially generated gains of more than 40% over three months but eventually failed before reaching the one-year mark. In September 2021, Bitcoin gained only 1.5% following the crossover before the pattern disappeared a few months later. BTC subsequently fell more than 70% from its highs over the following year.

The historical figures underline the inconsistency. Nine of the 12 golden crosses had measurable three-month returns, with an average gain of 24.9%. Only three remained intact for a full 12 months without a death cross, but those three produced an average one-year gain of 250%.

That makes the indicator considerably more compelling over a three-month horizon than as evidence of a sustained yearlong bull market.

USDT Dominance Shifts

The current Bitcoin setup gets another potential bullish signal from USDT dominance.

The metric measures Tether’s circulating market value as a percentage of the total crypto market. When USDT dominance declines, traders often interpret the move as a sign of increasing risk appetite, with cryptocurrencies accounting for a larger share of overall market value.

Still, falling dominance does not necessarily mean capital is flowing directly out of USDT. Since the metric is calculated as a ratio, it can decline simply because Bitcoin and other risk assets appreciate faster than the stablecoin supply.

Even so, USDT dominance has previously coincided with important Bitcoin trend reversals. The ratio formed a golden cross in November last year and then increased as BTC prices moved lower.

Now, TradingView data show the metric approaching the opposite pattern. Its 50-day moving average is on course to fall below the 200-day average, creating a death cross.

A sustained decline in USDT dominance is typically viewed as a risk-on signal because stablecoins represent a smaller portion of total cryptocurrency market value.

A More Constructive Combination

Bitcoin’s pending golden cross and the potential death cross in USDT dominance are moving in directions that generally favor risk assets.

Together, the indicators suggest that BTC’s recent momentum is improving while stablecoins are losing market share. The signals are not guarantees of another major rally, but the combination could provide stronger confirmation for Bitcoin’s current price strength than the golden cross alone.