Bitcoin’s daily golden cross reversed on Friday evening after the 50-day exponential moving average (EMA) fell back below the 200-day EMA as BTC retreated to $77,438. The crossover had briefly appeared earlier in the session.

The 4-hour chart’s golden cross remains intact, although momentum has weakened. The move came as interest-rate markets adopted a more hawkish outlook, with the probability of a rate hike at next week’s Federal Reserve meeting rising to 86% on CME FedWatch. This report was published by Decrypt.

Bitcoin was trading around $77,438, up 1.19% on the day but well below its earlier high of nearly $79,837. The pullback followed a shift toward a more hawkish rates outlook after inflation data was released.

The day’s consumer price index (CPI) data showed monthly core inflation at 0.3%, above the 0.2% analysts had expected. CME FedWatch, which tracks probabilities implied by 30-day federal funds futures, put the odds of a 25-basis-point interest-rate increase at about 69% shortly after the inflation data was published. That probability subsequently climbed to 86.5% within a few hours, according to the CME FedWatch Tool.

A rate increase would generally precede a risk-off move by investors, potentially weighing on risk assets such as Bitcoin and technology stocks if the Federal Reserve raises rates at its meeting next week.

Bitcoin’s daily candle opened at $76,529, rose to an intraday high of $79,837, then fell to a low of $76,040 before settling near $77,438. The cryptocurrency remained up 1.19% for the day, but had surrendered much of its advance from the session high.

That round trip was enough to push the daily EMA configuration back into bearish territory. Bitcoin’s 50-day EMA, which tracks the average price of BTC over the previous 50 days, had briefly crossed above its 200-day EMA earlier Friday. Traders refer to that formation as a golden cross, a widely watched bullish chart pattern. Bitcoin had not recorded one since last November.

The 50-day average has since slipped below the 200-day average, leaving Bitcoin close to, but not consistently above, a daily golden cross. The crossover could still be confirmed, but the move did not hold during Friday’s session.

Why the golden cross can flicker

A golden cross forms when a shorter-term moving average—in this case, the 50-day average of the last 50 daily closes—moves above a longer-term moving average, such as the 200-day average.

The pattern is among the most closely followed trend signals in financial markets because it has historically preceded some of Bitcoin’s larger rallies. However, it is also a lagging indicator based entirely on past prices. When the two averages are close together, as they are for Bitcoin, intraday price swings can cause the signal to turn on and off within a single session.

That was the pattern on Friday. Bitcoin’s advance to $79,837 pushed the 50-day EMA above the 200-day EMA, while the subsequent retreat toward $77,438 pulled it back below. Because the daily candle had not yet closed, the reading could change again before the end of the session.

The episode illustrates how narrow some golden-cross formations can be. When the moving averages are close, one volatile trading day may move the crossover in either direction before the trend becomes clearer.

Other indicators continued to show trend strength regardless of which side of the crossover Bitcoin occupied. The Average Directional Index (ADX), which measures trend strength without indicating its direction, stood at 45. That was comfortably above the 25 level commonly used to distinguish a meaningful trend from market noise, while positive directional movement remained stronger than negative directional movement.

The Relative Strength Index (RSI) measures momentum on a scale from 0 to 100. Readings above 70 are generally considered overbought, while readings below 30 are considered oversold. Bitcoin’s RSI was 55.5, placing it on the bullish side of neutral according to the indicator.

Four-hour chart remains bullish, but momentum has cooled

Unlike the daily chart, the 4-hour chart did not lose its golden cross. The 50-period EMA remains above the 200-period EMA, preserving the broader bullish structure that formed in late August.

Several other readings on the 4-hour timeframe, however, have weakened. RSI fell to 43.3, which is in bearish territory. The Squeeze Momentum indicator, after remaining compressed for several days, fired as volatility expanded by 3.95%. Such a move typically occurs as a sharp price move begins; in this instance, the move was to the downside.

The 4-hour ADX stood at 25.1, only slightly above the 25 threshold. That reading indicates that the intraday trend is considerably weaker than the trend reflected by the daily ADX.

The broader chart structure remained bullish. The 4-hour golden cross has held since late August, while the daily ADX reading of 45 indicated that a significant trend remained in place even as the daily moving-average signal shifted during a volatile session.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.