A positive start to 2024 has seen bitcoin pass through a market pattern known as a “golden cross” for the first ever time.
The trading term refers to when the cryptocurrency’s 50-day moving average crosses its 200-day moving average (see chart below), which is used by some analysts as an indicator that the market is entering a bullish phase.
It comes nearly three years after bitcoin crashed through the dreaded “death cross”, which preceded bitcoin losing more than half of its value over the next year.
Bitcoin’s price has been boosted in recent weeks by the anticipation surrounding the US Securities and Exchange Commission (SEC) approving the first spot exchange-traded funds (ETFs).
The first batch of approvals, which came last Thursday, opened the crypto market up to billions of dollars worth of institutional investment and saw bitcoin’s price rise to a 21-month high.
Following a swift correction of around 10 per cent, bitcoin’s price has since steadied just above $42,000, leaving some analysts looking towards more positive momentum in the weeks and months ahead.
“With the rails now in place for institutional investors to now get bitcoin exposure through a regulated vehicle, we could be set for an explosive 2024,” said Simon Peters, a market analyst at the online trading platform eToro.
“While we’re in for a quieter week in the world of crypto – a much-needed breather some might argue – with the bitcoin spot ETF applications now approved, attention will now be turning towards the upcoming block reward halving.”
The bitcoin halving event will see the rewards for mining the cryptocurrency decrease by 50 per cent, reducing supply while theoretically not impacting demand.
This anti-inflationary measure, which is built-in to bitcoin’s underlying code, has historically led to record-breaking rallies. Some analysts have predicted that the next halving event could see bitcoin rise above its all-time high of $68,000 reached in November 2021.
The next halving event, which is currently scheduled for 22 April, 2024, will see the mining reward for a block of bitcoin drop from 6.25 BTC to 3.125 BTC. This will mean bitcoin’s annual inflation rate will fall from 1.7 per cent to around 0.85 per cent, dropping below 1 per cent for the first time.