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Dogecoin Is Approaching a Golden Cross: What Does This Mean for Traders?
Dogecoin (DOGE) could be poised to reward long-term holders and traders if the market’s read on crypto tea leaves is correct. The original meme coin heads towards what is known in traders’ parlance as a “golden cross”.
What does that mean? Let’s dive into some DOGE TA (so if lines on charts aren’t your thing, the rest probably isn’t for you).
Of course, Dogecoin is down today, falling 1.9% to a price of $0.145, but its weekly performance remains positive: DOGE is up 5% in the last seven days. If we zoom out, this upward trend persists despite the correction experienced over the last four days.
And there’s even more reason for optimism if we look a little closer: the 50-week simple moving average (SMA) of the token’s spot price is currently rising and – if things continue in this direction – could surpass the 200-week SMA . in the coming weeks. This intersection would form a golden cross – something that hasn’t happened with Dogecoin since the beginning of 2021. And that was just before DOGE went on a mega run and just four months later reached its all-time high of over $0.73 per coin .
A look at Dogecoin’s SMA 50 and SMA 200 lines as they converge. Image: TradingView
In simple terms, the formation of a golden cross would mean that new buyers are recording gains faster than long-term holders (who had to endure the sluggish performance of the previous days). For traders, this signals a potential market uptrend and is often interpreted as a strong buy signal, marking the end of a downtrend and the beginning of a bullish phase.
So how did DOGE find itself on the brink of another golden cross? The first positive sign for Dogecoin price came when it broke its 200-week SMA in March, with an increase of over 70% in just one week. This move helped boost the 200 SMA, breaking its previous flat performance. As mentioned, the imminent golden cross would be the first in more than three years – if it happens.
The previous golden cross, in January 2021, came just before buyers sent the coin from $0.0096 to an all-time high above $0.73 in May of the same year – representing a price increase of almost 8,000%. But most of you know what happened next: this massive increase was followed by a 90% decline in subsequent months. Dogecoin then stabilized between $0.05 and $0.10 from May 2022 to February 2024.
A look at Dogecoin’s SMA 50 and SMA 200 lines as they converge. Image: TradingView
So what does this all mean? Well, while this is how traders interpret this data and can often use it to help guide their decisions and behavior, it doesn’t mean that none of this will happen again. So don’t break out that expensive champagne for the OG meme coin just yet.
After all, a golden cross is just one of many indicators that traders watch, and prudent investors will consider risk management strategies and other factors.
For example, and perhaps most importantly, the market as a whole was in a completely different situation in 2021. Macroeconomic conditions have changed and geopolitical turmoil has market participants currently feeling panic. So when it comes to trying to time the market for maximum gains, it’s important to keep in mind that while history may often rhyme, lightning rarely strikes twice.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.