Does The Bitcoin Death Cross Mean Doom And Gloom For Crypto?
Bitcoin price on daily BTCUSD charts is only days away from completing a “death cross.” According to Investopedia, “a death cross is a technical chart pattern indicating the potential for a major sell-off.” It occurs when a short-term moving average (in this case the 50-day MA) crosses below a long-term moving average (the 200-day MA).
The signal tells investors that the asset’s growth has slowed and is showing potential of a bear trend. Long-term price depreciation is possible. However, in Bitcoin, things don’t always behave the way they should.
Data Shows Whether Or Not You Should Fear The Reaper
Such crossovers, are often used to confuse the market during consolidation phases. Ahead of the 2020 bull breakout, there were two death crosses and two golden crosses. One notable death cross in October 2019 resulted in a 42% pump the day prior signal.
Despite the strength, price action was rejected back down to new lows, only to golden cross, death cross, then golden cross again. Ahead of the fabled 2016-2017 bull run, there was also a similar fakeout – depicted in the green box.