Amid Bitcoin’s decline this week, eagle-eyed chart watchers noted that an ominous-sounding technical break could be imminent: the coin is approaching a bearish pattern known as the Death Cross.
The world’s largest digital currency has plummeted, bringing its average price close to its 200-day moving average over the past 50 days. Should the short-term line fall below the long-term, the coin would reach the forbidden formation. The indicator is usually viewed as a closely watched technical measure that could give an indication of further pain.
The last time Bitcoin marked a death cross was in November 2019 – the cryptocurrency was down about 5% a month after it exceeded it.
Although it has not yet done so, “the collision seems inevitable at this point,” wrote Mati Greenspan, founder of Quantum Economics. “A death cross could be an indication that prices could remain subdued for a while.”
Bitcoin has been caught in a downward spiral for the past few weeks, losing about 45% since it hit a record high in mid-April. The recent sell-off was exacerbated by billionaire Elon Musk’s public reprimand about the energy consumption of the servers underlying the token. The strengthened Chinese supervisory authority also clouded the mood.
On Tuesday, Bitcoin overturned Analysts pointed to a technical breakdown as well as the ransom recovery from Colonial Pipeline Co. as evidence that crypto is not out of government control. The US has received back almost all of the Bitcoin ransom paid to the perpetrators of the Colonial cyberattack last month, as a sign that law enforcement agencies are able to track down online criminals, even if they operate outside of the country’s borders.
Meanwhile, chartists are looking to the $ 30,000 mark, which the coin briefly touched during a brutal sell-off last month. Exceeding that round number could trigger another wave of sales as there is no tech support between $ 20,000 and $ 30,000.
Still, Greenspan adds a caveat on the Death Cross: it is usually followed by something called a gold cross, which tends to be a bullish signal. “If prices bottom out here, we can probably expect a strong rally to resume once the market is ready,” he said.
– With the support of Kenneth Sexton