The bulls of Bitcoin [BTC] have successfully overcome bearish pressure after a week of persistent efforts to surpass $64K, achieving a daily peak of $64,825.
This level has been tested multiple times since the pinnacle of BTC at $73K in March. In August, bears reestablished their dominance, hindering a potential breakthrough towards $68K.
Currently, with BTC trading at $63,687 following another unsuccessful attempt to maintain support, what will be necessary to break this cycle?
Bitcoin’s Golden Cross Requires Long-Term Confidence
According to the daily price chart, Bitcoin’s 50-DMA has crossed over the 200-DMA, indicating a Golden Cross.
Historically, this pattern has served as a reliable indicator for monitoring the directional trends of Bitcoin. When the short-term moving average surmounts the long-term one, it typically signifies a robust upward momentum.
Intriguingly, towards the end of the August cycle, the short MA nearly converged with the long MA, suggesting a potential bull run.
However, a resurgence of short positions prevented the crossover from materializing, resulting in a significant rejection and a retracement to the $55K support level.
If a similar scenario unfolds, the trend might reverse into a Death Cross, hinting at a bearish market – What factors need to shift?
Crucial Importance of Diminishing Short Control in BTC
Typically, traders perceive a Golden Cross as a signal to initiate long positions, anticipating future price surges.
Considering this, CryptoCrypto conducted an analysis of the speculative market to evaluate whether traders were positioning themselves to benefit from the crossover.
Traditionally, whenever Open Interest (OI) escalates, it frequently aligns with Bitcoin testing crucial resistance levels. Each peak has been characterized by a noticeable increase in futures traders going long, but this surge typically ends with them closing their positions, leading to a sharp decline for BTC.
Surprisingly, while OI reflects these market tops, BTC’s value has not followed the same trajectory, potentially suggesting a resurgence of short dominance.
As Bitcoin bulls embark on their fifth day of exerting pressure to push BTC above $65K, a notable influx of long positions has surfaced.
Nevertheless, if short control persists, liquidation of long positions might trigger another downturn, potentially pushing BTC below $60K before an actual breakout attempt can come to fruition.
This Adjustment Can Have a Significant Impact
On a monthly basis, the RSI has dropped below 80%. Analysis by CryptoCrypto indicated that Bitcoin might be preparing for a short-term price correction, as oversold conditions often ignite renewed buying interest.
Historically, such declines in RSI have preceded upward price corrections during bullish cycles, prompting investors to capitalize on perceived opportunities.
While this development could enhance the chances of the Golden Cross occurring promptly, to ensure long-term stability, the market ought to reduce OI by at least 10%. This reduction would make Bitcoin less vulnerable to short dominance.
Without this adjustment, although BTC may maintain its position above $64K in the near term, reaching $65K in the immediate future seems unlikely.