Bitcoin's "Golden Cross" signal quietly subsided due to rising interest rate hikes

Bitcoin briefly hit the daily "golden cross" and fell back, and market sentiment turned cautious due to the influence of inflation data.

Although Bitcoin's previous brief "golden cross" signal at the daily level has been confirmed, it was not maintained in the afternoon market. BTC is currently trading at about US$77,438, a 1.19% intraday increase, but well below the intraday high of near US$79,837 in early trading. The correction followed today's inflation data and led to further tightening of interest rate market expectations.

Today's consumer price index (CPI) showed monthly core inflation at 0.3%, higher than analysts 'expectations of 0.2%. With the release of inflation data, CME FedWatch data, which tracks the implied probability of 30-day federal funds futures, showed that the market's forecast for the next 25 basis points rate hike by the Fed has soared rapidly from about 69% at the time of its first release to 86.5% in recent hours.

Normally, expectations of raising interest rates will trigger investors 'risk aversion. If the Federal Reserve decides to raise interest rates at next week's meeting, risky assets including Bitcoin and technology stocks may be hit. Today's daily opening price of Bitcoin was US$76,529, which surged to US$79,837, then fell back to a low of US$76,040, and finally closed around US$77,438. Although it still recorded a 1.19% increase during the day, it has dropped significantly compared with the intraday high.

This sharp up-and-down movement caused Bitcoin's daily index moving average (EMA) reading to turn bearish again. Earlier on Friday, the BTC 50-day EMA, which tracks average prices over the past 50 days, briefly crossed the 200-day EMA, forming what traders called a "golden cross." This is one of the most bullish signs in the chart pattern, and Bitcoin has seen such a pattern for the first time since November last year. However, the duration of this signal is extremely short.

At present, the 50-day average price of Bitcoin has fallen back below the 200-day moving average, which means that the price is only one step away from the real "golden fork". Although this form may still be formed in the future, it is clear that today is not the day to be established.

The so-called "golden cross" means that the short-term moving average (such as the 50-day moving average that tracks the past 50 closing price days) crosses the long-term moving average (such as the 200-day moving average). Since it has historically predicted a sharp rebound in Bitcoin, it is a closely watched trend signal in any market. However, this is also a lagging indicator based entirely on historical prices. When two moving averages are close to each other-as Bitcoin is currently in-intraday fluctuations can cause the signal to switch repeatedly during a trading session.

That's what happened today: pushing prices higher to $79,837 put the 50th EMA briefly above the 200th EMA, and a subsequent retracement to $77,438 pulled it back below. For daily chart observers, today's market is a useful reminder that in some cases, the "golden cross" signal is actually very fragile. When the two moving averages are close together, a single violent fluctuation can cause the crossing direction to change repeatedly until it stabilizes before the close. As today's daily candle chart has not yet closed, the reading may still flip again before the close.

Trend strength remains solid, technical indicators show a long and short game

No matter which side of the intersection the price is on, the overall trend strength remains solid. The Average Trend Index (ADX) is used to measure the strength of a trend without distinguishing direction. Today's ADX reading is 45, well above the 25 threshold that distinguishes true trends from market noise, and positive moving indicators are still better than negative moving indicators.

The Relative Strength Index (RSI) is a measure of momentum and ranges from 0 to 100, with a value above 70 indicating overbought and a value below 30 indicating oversold. Bitcoin's current RSI of 55.5 is still in a neutral position, which means that bulls still have reasons for optimism.

Unlike the daily chart, the 4-hour chart has never lost its "golden cross" shape. The 50-cycle EMA remains above the 200-cycle EMA, maintaining the broader bullish structure that has developed since late August. However, almost all other indicators in the four-hour time frame have cooled.

The RSI has dropped to 43.3, entering bearish territory. The Squeeze Momentum Indicator, which has been compressed for several days, has just triggered, and the volatility has widened by 3.95%-which is usually a sign that strenuous exercise is about to begin, and in this case appears to be a downward trend. The ADX value on the 4-hour chart is 25.1, slightly above the threshold of 25, indicating that the intraday trend is much weaker than the trend shown on the daily line.

From a larger perspective, the market is still biased towards bullish. The 4-hour chart has not wavered since late August, and the daily-level ADX value of 45 confirms the existence of a true trend, although the moving average label has flipped amid sharp single-day fluctuations.