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Bitcoin, XRP and Ethereum – the three most dominant coins in the cryptocurrency market – are about to form a 3-day golden cross together.
This signal is rare, having occurred only a few times in the past in each individual asset. However, all three of these major cryptocurrencies have never triggered this signal at the same time. What exactly does this mean, and what are the consequences of the 3-day golden cross?
Bitcoin, XRP, and Ethereum Lead Market Recovery
Between BlackRock and other institutions seeking to launch a bitcoin ETF, and XRP and Ripple’s massive victory against the US Securities and Exchange Commission (SEC), the crypto market outlook is much less gloomy than it was a few weeks ago.
Even the technical environment is starting to show signs of a possible uptrend. Notably, many top cryptocurrencies are inching closer to a golden cross on the 3-day time frame, which has happened only a few times in the past.
This is going to happen simultaneously in Bitcoin, Ethereum and XRP, for the first time in their history. Previously, these signals came at different stages of previous bull markets. It wasn’t until all three coins turned golden crosses that a strong rally began.
Top three crypto assets – #bitcoinEthereum, and #XRP – on the brink of the golden cross on the 3-day time frame
Three simultaneous firings never happened before
This would be the third in history for BTC and XRP and the second for Ether pic.twitter.com/bzVfK3ZpBp
— Tony “The Bull” (@tonythebullBTC) 19 July 2023
What is the Golden Cross in crypto?
A golden cross occurs when a higher timeframe moving average, typically the 200-period MA, crosses above a lower timeframe moving average, typically the 50-period MA, from below. In contrast, the death cross is when both cross from top to bottom.
These crossovers generate a buy or sell signal in a moving average-based trading system. Such systems are designed to capture most of the trend, but miss much of the early part of the rally while waiting for confirmation.
The 3-day golden cross throughout the years | BTCUSD on TradingView.com
Moving Average Crossover: How Does the Signal Stack Up?
This was the only time bitcoin signaled a decline in 2019. In all other instances, a buy signal using nothing more than a simple moving average crossover was wildly profitable with limited downside. In 2015, the BTCUSD 3-day golden cross gained over 2,000% ROI before crossing back and giving a corresponding sell signal. XRP’s golden cross to death cross sustains over 9,000% gains in uptrend. However, Ethereum never triggered a signal back then due to insufficient price history.
As 2019 approached, bitcoin hit a rut, where a buy signal was in the midst of a prolonged downtrend. Neither XRP nor Ethereum triggered any signals until 2020, when the entire crypto market started rallying together. The 2020 ETHUSD golden cross sustained over 1100% ROI before the death cross position was closed. XRP failed to set a new all-time high, but the golden cross still registered a 200% ROI.
Even though bitcoin was active in early 2019 and went through a downtrend, the buy signal was still ultimately effective and retained a 550% ROI until the position was closed due to the death cross. Of the five historical buy signals, the golden cross had an average ROI of 2,570% when it occurred. Although such returns are unlikely in the future, it shows that the signal is effective.
