Bitcoin ‘death cross’ watch. What could the technical omen portend?

Bitcoin price made its way up 2.9% over the past 24 hours, while overall market sentiment remains in the “extreme fear” zone.

To give this sentiment a broader context, the announcement that the Federal Reserve plans to increase Interest rates to curb inflation were accompanied by the International Monetary Fund (IMF) warning about a growing connection between cryptocurrencies and stock markets that threatens financial stability.

Market analysts, meanwhile, anticipate that Bitcoin will hit the ‘death cross’ soon, but what the predictive potential of the technical chart pattern is as regards future price action remains to be figured out.

The ‘cross of death’

The price of Bitcoin is currently changing hands at around $ 43.7, after dropping as low as $ 39.7 on January 10.

And as Bitcoin heads to the ‘death cross’, market analysts are not convinced that the technical omen necessarily spells fear for Bitcoin.

This particular technical pattern looming over the Bitcoin price chart is formed when the 50-day moving average (MA) crosses the 200-day MA, forming a cross, and is generally viewed as an omen of a bear market. .

Paths Crossed: Blue 50-Day MA and Yellow 200-Day MA (TradingView)
Paths Crossed: Blue 50-Day MA and Yellow 200-Day MA (TradingView)

Its anticipation is unsettling, especially when investors are concerned, which appears to be the case judging by Bitcoin’s fear and greed index, which has been in the red for weeks.

However, looking at the cross formations of Bitcoin’s death in the past does not exactly simplify the interpretation.

Could Bitcoin avoid forming the death cross?

The last time MAs did a death crossover was in June 2021, when prices fell nearly 20% before bottoming out a month later.

Just a quick reminder: this major market downturn needs to be remembered in a larger context, as Bitcoin’s hash rate dropped dramatically with China enforcing its ban.

However, a previous bearish death crossover occurred in March 2020 after the price bottomed out, presenting no barrier to earnings. In fact, he got taller and formed a ‘golden cross’ two months later.

Mati Greenspan, founder of Quantum economics, He said CryptoSlate:

“At this point it seems inevitable. The respective MAs are on a collision course and are likely to cross over later this week or early next. ”

But according to Greenspan, this doesn’t necessarily herald a bear market.

“As with all technical indicators and chart information, what we are seeing is past data and not an indication of what will happen in the future,” he concluded.

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Source: https://cryptoslate.com/bitcoin-death-cross-watch-what-could-the-technical-omen-portend/

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