Connect with us

Altcoin

PBoC Attributes Increasing Interest in Digital Yuan to Rise in Bitcoin Price, BTC Closer to $60K

Published

on


Bitcoin has been seeing constant gains over the past months while reaching new highs. Now it is trading at almost $60,000.

The People’s Bank of China (PBoC) said that the increase in Bitcoin could be triggering interest in China’s digital yuan. China’s central bank tied the increasing interest in digital yuan to the recent rise in BTC despite the fact that crypto is effectively banned in the country.

According to the research bureau director at PBoC, Wang Xin, the market has an increasing interest in the digital yuan.

According to CNBC’s translation of Wang’s comment. He said:

“On one hand, this is related to more and more central banks in the world participating in the development of domestic digital currencies.”

Over time, several countries worldwide have been working on creating their central bank digital currencies (CBDCs). Already, some central banks have begun piloting and trial their digital currencies. CBDC aims to replace and reduce cash in circulation, as well as to promote cash in circulation. It is simply the digital version of fiat currency.

The People’s Bank of China has been working on the digital yuan since 2014, and the central bank is arguably the farthest ahead in the development.

PBoC Says Bitcoin Price Surge Fuels Increasing Interest in Digital Yuan

Wang said that market interest in the country’s digital currency is “very strong and everyone is paying close attention.” The bank executive said:

“On the other hand, this (interest) may also be related to the large increase in the price of Bitcoin.”

Bitcoin has been seeing constant gains over the past months while reaching new highs. BTC has climbed more than 100% since the beginning of the year. At press time, Bitcoin is up 1.52% to $59,844.69.

The PBoC has continually carried out pilot projects of the digital yuan across several cities in China. However, the central banks have not announced an official date for the launch of the digital yuan.

During the Chinese Lunar year in February, the Chinese government issued $1.5 million in the digital yuan atrial. The trial, which took place in Beijing, signified the third major test of the CBDC. When the municipal government announced the trial, the authorities said 50,000 people would be selected to participate in the test. The participants will then receive about $30 each in the digital yuan. After then, the recipients can spend the issued funds in selected offline locations or some parts of JD.com during the holiday.

Apart from Beijing, the digital yuan tests have also been conducted in Shenzhen and Chengdu.

In a recent statement, Wang revealed that there would be more trials of the digital yuan. He noted that the pilots are “increasing, and also expanding in scope.’

“Next, we will push ahead with digital RMB pilots, and accumulate more experience,” he stated.

Other news from the crypto industry can be found here.

next Altcoin News, Bitcoin News, Cryptocurrency news, News

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.



Source link

Altcoin

Not sure if the bulls are back? Here’s how the golden cross spots trend reversals

Published

on

By


The most important aspect in trading is to correctly identify the long-term trend. Once this is done, the rest of the steps are not very difficult because all a trader needs to do is look for buying opportunities in an uptrend and selling opportunities in a downtrend. 

In reality, many traders complicate the process by waiting for lower levels to buy in a bull market and missing a large portion of the rally. Then, when the trend reverses and the price starts falling, the same traders start buying, which usually results in losses.

To avoid this pitfall, traders can incorporate the use of key moving average convergence patterns in order to have a better gauge of market momentum and the direction of the trend. In last week’s article, we reviewed the Death Cross, and this week we will look at the golden cross pattern. This setup can help keep traders at bay in a downtrend and give them a green signal to start buying when the trend turns bullish.

Let’s investigate this pattern and learn how to use it when trading.

What is a golden cross and how does it form?

A golden cross is a setup that signals a possible change in a bearish downtrend. It is formed when a faster period moving average, usually the 50-day simple moving average, crosses above the longer-term moving average, generally the 200-day SMA.

BTC/USD daily chart. Source: TradingView

In a downtrend, both the 50-day SMA and the 200-day SMA are sloping down. However, when the price reaches an attractive valuation, long-term investors start accumulating, which arrests the pace of the decline. As more investors start buying, the trend starts to turn up.

A sustained up-move results in the 50-day SMA changing its direction from down to up. However, the 200-day SMA is slower to respond, hence when it is either falling or has flattened out, the 50-day SMA rises above it, forming the golden cross.

When a golden cross forms, it is a sign that the downtrend has ended and a new uptrend could have begun.

However, like every setup, the golden cross is not foolproof. It gives false signals several times but with a few filters, traders may reduce the whipsaws.

Related: Here’s 5 ways investors can use the MACD indicator to make better trades

A profitable golden cross

BTC/USD daily chart. Source: TradingView

Bitcoin (BTC) bottomed out at $3,858 on March 13, 2020, and the most recent golden cross formed on May 21, 2020, when the price closed at $9,061.96. That means, the BTC/USD pair had already moved 134% from the lows by the time the golden cross confirmed a change in trend.

Inexperienced traders may have felt the price has run up too fast and would have waited for a deep correction to happen before buying. However, when a trend changes, it rarely gives an opportunity to buy at much lower levels as was the case here.

The rally never looked back and it hit an all-time high at $64,899 on April 14, 2021, a massive 616% gain from the level where the golden cross formed. This shows that the trader who just bought and held after the formation of the golden cross would have earned huge returns.

However, every golden cross does not provide such outsized returns and sometimes traders fall victim to whipsaws.

A failed golden cross

Bitcoin dropped from a local high at $13,868.44 on June 26, 2019, to a local low at $6,430 on Dec. 18, 2019. The golden cross formed on Feb. 18, 2020, when the pair closed at $10,188.04.

BTC/USD daily chart. Source: TradingView

However, traders who bought after the golden cross formed may have suffered quick losses as the pair plummeted to $3,858 just a few days later. This shows how traders may sometimes get caught on the wrong foot by just buying after the golden cross.

Related: Unsure about buying the dip? This key trading indicator makes it easier

Filters can when the golden cross throws a false signal

Traders could avoid buying if the golden cross forms when the 200-day SMA is still sloping down. They can wait for the 200-day SMA to flatten out or turn up before buying as that may reduce the whipsaws.

EOS/USDT daily chart. Source: TradingView

As an example, EOS formed a golden cross pattern on Feb. 8, 2020 when the price was at $4.76. This price cleared the filter as the 200-day SMA had flattened out. However, had traders taken the trade, it would have turned into a loss as the EOS/USDT pair topped out at $5.49 on Feb. 17, 2020, and then plunged sharply to $1.35 on March 13, 2020.

The second golden cross on Aug. 22, 2020, did not clear the filter as the 200-day SMA was sloping down when the pattern formed. This would have kept the bulls from getting sucked into this trade.

The third golden cross on Dec. 12, 2020, cleared the filter but it would have hit the stop-loss as it breached the strong support at $2.20 on Dec. 23, 2020. Finally, the fourth golden cross that formed on Feb. 08, 2021, turned out to be profitable.

The above example shows that when the price is stuck in a range, the golden cross does not act as the ideal indicator. Therefore, traders may add another filter to buy only after the price breaks out of the range. This may reduce the whipsaws further and help traders buy only in uptrends.

When a cryptocurrency is in a downtrend, traders may wait for the golden cross to occur before starting their purchases. This could keep traders out of trouble in a falling market.

After the golden cross sustains and a new uptrend is confirmed, traders may look for buying opportunities. Among the many possibilities, one that was highlighted in an earlier article to buy on dips to the 20-day EMA or the 50-day SMA could come in handy.

Key takeaways

A golden cross can confirm that a downtrend has ended and a new uptrend could have begun. Until a golden cross forms, long-term investors may avoid cherry-picking as that may result in losses in a downtrend.

However, like every other pattern, the golden cross is not perfect. It may result in whipsaws if the coin enters a consolidation during the bottoming formation. Therefore, traders must take precautions to avoid being sucked into bull traps.

Once the uptrend is established after the golden cross, traders may look for buying opportunities and stay with the trend till a reversal is signaled.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.