BTC Approaches Positive Golden Cross Amid Moody’s U.S. Downgrade Over Debt Worries

The price chart for Bitcoin is displaying a promising upward trend reminiscent of the surge observed in late 2024, where prices escalated from $70,000 to $100,000, driven by escalating worries about U.S. debt sustainability.

As the leading cryptocurrency by market capitalization, Bitcoin is poised to establish a “golden cross” shortly, based on insights from a charting platform. This technical formation appears when the 50-day simple moving average (SMA) exceeds the 200-day SMA, indicating that short-term pricing trends are outshining the longer-term outlook, paving the way for a potential bull market.

The golden cross, while historically varied in its effectiveness at signaling price movements, merits attention this time as it follows closely on the heels of a “death cross,” which previously led many bearish investors to incur losses.

A parallel situation was observed between August and September 2024, setting the groundwork for Bitcoin to convincingly rise above $70,000 by early November, with prices eventually hitting a peak of over $109,000 in January.

The chart illustrates that Bitcoin hit a low of around $50,000 in early August of last year after the 50-day SMA fell below the 200-day SMA, marking the occurrence of the death cross.

This death cross effectively acted as a bear trap, reminiscent of the market reversal seen in early April this year. In the weeks following, prices began to rise, initiating a new upward trend upon the emergence of the golden cross in late October 2024.

Since early April, this bullish pattern has resurfaced, and prices may soon embark on another significant increase with the confirmation of the golden cross expected soon.

While past performance is not indicative of future trends, and technical patterns can yield unexpected results, current macroeconomic conditions appear to align favorably with the bullish technical setup.

Concerns about U.S. Debt Intensify

On Friday, credit rating agency Moody’s announced a downgrade of the U.S. sovereign credit rating from a top-tier “Aaa” to “Aa1,” expressing concerns about the escalating national debt, which has now exceeded $36 trillion.

The bond market has been reflecting these fiscal apprehensions for some time. Recent discussions have highlighted how persistent elevated Treasury yields indicate expectations of continued high fiscal spending and a sovereign risk premium, both of which can be seen as favorable signs for Bitcoin.