Melt the butter in a skillet over medium heat. Add the sliced onions and cook, stirring often, until they turn golden and soft, about 15 minutes. Set aside to cool slightly.
Heat the oven to 375°F and line a baking sheet with parchment paper.
In a large bowl, combine the ground beef, cracker crumbs, egg, milk, salt, black pepper, garlic powder, shredded cheddar cheese, and the cooled caramelized onions. Mix gently with your hands until just combined.
Shape the mixture into a loaf about 8 inches long and place it on the prepared baking sheet.
Lay the bacon slices over the top and sides of the loaf, tucking the ends underneath to secure them.
Bake for 50 to 60 minutes until the internal temperature reaches 160°F and the bacon is crisp. Let the meatloaf rest for 10 minutes before slicing.