Bitcoin (BTC), the largest cryptocurrency by market capitalization, may be about to form a key technical pattern, with its daily moving averages likely to cross in the coming days.

Whether the outcome is a death cross or a golden cross is unknown; however, Bitcoin's 50-day simple moving average (SMA) has turned upward and may cross over the 200-day SMA in the days ahead, hinting at a potential golden cross.

A golden cross happens when a shorter-term moving average, usually the 50-day SMA, crosses above a longer-term moving average, usually the 200-day SMA, with the reverse indicating a death cross.

At the time of writing, BTC was slightly higher 0.88% in the last 24 hours to $66,883 following Wednesday's crypto market drop.

Bitcoin recovered from yesterday's lows of $65,149 to highs of $67,546 in today's trading session after the Federal Reserve's (Fed) most recent Beige Book survey showed a downbeat outlook, boosting the argument for more rate cuts in the coming months.

Likely scenarios

As previously indicated, the nature of the crossover will determine whether it is a golden or death cross. Bitcoin's current technical setup suggests that short-term price momentum is outperforming long-term momentum, indicating a probable golden cross, which is a bullish signal.

If the golden cross is confirmed, a few scenarios might be likely. In the past, Bitcoin has seen notable price increases following the golden cross event, which often signals that the medium-term trend is strengthening.

If this is the case, the Bitcoin price could surge beyond key resistance levels. Traders will be watching for BTC to decisively break $70,000, which could pave the way for further gains to $75,000 and beyond.

However, the moving average crossover is often criticized for being a lagging signal that might trap traders on the wrong side of the market.

If this happens, the golden cross may result in a false breakout, in which the price surges quickly but fails to maintain upward momentum, ultimately leading to a pullback. This outcome might be possible if broader market conditions remain unfavorable.

In some cases, a golden cross might precede a temporary pullback before the rally begins. This could occur if traders take profits in the short term, resulting in temporary bearish pressure. However, following the initial dip, the market may regain momentum, sending prices higher.