Bitcoin has been around for eleven years (Image: Avishek Das/SOPA Images/LightRocket via Getty)
Market anxiety hangs on what has become the most important psychological barrier of bitcoin’s 11-year lifespan, meaning this current run towards 10k could prove to be critical towards the direction the world’s most dominant cryptocurrency takes this year.
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The immediate hurdle before $10k comes in the shape of an exponential moving average cross – the first in almost a year – that for many will signal a sure sign that double figures are again on the cards.
The cross comes in two forms – a golden cross or a death cross – depending on where the levels of the 50-day exponential moving average (EMA) and the 200-day EMA sit in relation to one another.
In this case, the 50 sits above the 200, which means that when the lines converge, it will become a golden cross that often heralds upward price movement.
The opposing convergence is the “death cross”.
Three months ago, the last time a death cross occurred, bitcoin lost a quarter of its value and plummeted to $6,300.
It has steadily clawed its way back up since then.
Looking over the market history, we can see the last golden cross – April 2019 – triggered a rally that propelled BTC into double figures.
If that plays out again, there will be plenty of enthusiasts declaring a bull market as we head towards the much-anticipated halving in May.
A halving occurs roughly every four years and acts as a correction to ensure the availability of bitcoins remains steady until the maximum supply of 21 million has been reached.
The term “halving” simply means miners will receive 50 percent fewer rewards for verifying transactions.
However, as always in any cryptocurrency market, these things come with a health warning, and there are plenty of naysayers out there simply not buying into bitcoin’s recent run.
They may have a point.
Market volume isn’t huge, and most of the movement is happening within a tight range – something that many an observer would read as a prophecy that volatility is inbound.
It’s that volatility that plagues bitcoin at every turn – quite often at the end of the month.
Unusually, that regular occurrence could coincide with an EMA cross, meaning the warning of volatility really deserves to be heeded.
Which way that possible volatility drives BTC remains to be seen.
Right now, though, the momentum is favouring a bullish outlook for February.