A death cross occurs when the 50-day moving average falls below the 200-day moving average. In that case, Bitcoin could enter a bear market area similar to 2018.
Previous death crosses resulted in further price drops of 70% in 2018 and 47% in 2019. The 2020 Death Cross came shortly after the March market crash caused by the coronavirus pandemic, which at the time proved to be a delayed signal.
“Speculative reports suggest that Bitcoin could soon hit $ 20,000, which points to the emerging bearish cross between the 50 and 200 daily moving averages.” Stephen Kelso, Head of Markets at the brokerage firm ITI Capital, wrote in an email to CoinDesk.
Bitcoin appears and is oversold on the daily chart increased by about 13% in the last 24 hours, which is the biggest gain in two weeks. Wednesday’s price surge came despite a string of negative headlines from China, including raids against Money laundering and mining Shutdowns.
The looming death cross could limit upward movements. Resistance is seen at around $ 40,000 which has limited short-term price hike over the past week. Although the May sell-off is stabilizing, the longer-term technical outlook appears less optimistic.
For now, buyers are defending short-term support above $ 30,000. A recovery rally is typical when the price falls below the 50-day moving average. Thereafter, a series of lower highs typically confirms a shift from a bullish to a bearish trend.