As Bitcoin continues to struggle to maintain the $6,000 price area, the formation of another technical pattern is raising some concerns. The cryptocurrency charted a Death Cross, which is something that should be taken into consideration, of course, as long as you follow technical analysis.
First things first, it’s important to note that a Death Cross is a commonly referenced technical analysis setup. It occurs when the 50-day moving average line (MA-50) crosses below the 200-day moving average line (MA-200).
Death Crosses took place only a few times in the short history of Bitcoin. This particular indicator is usually a telling sign that a bear market is underway for the mid-longer term.
However, the cross is usually a lagging indicator, meaning that the asset might have already seen part or most of the fall before the death cross took place.
In the short history of Bitcoin, there were two major Death Cross occurrences, which took place in April 2014 and March 2018 to indicate the beginning of a bear market. The bear markets of 2014 and 2015 each lasted about a year and ended officially with a Golden Cross, which is the opposite of a Death Cross (when the 50-days MA crosses back above the 200-days MA).
The 2018 Death Cross is the first down-arrow from the left on the following chart.
As you can see, the next arrow (up) from the left indicates the Golden Cross, which took place in April of last year. Bitcoin was trading around $5400 on that day, however, just two months after, the cryptocurrency had recorded its 2019 peak at $13,880.
The next Death Cross that took place in October 2019 to indicate the end of the 2019 bull market. However, on that day, Bitcoin wasn’t updated about the bearish indicator and went on one of its best ROI days in history, surging 42% in just day. However, there was a serious catalyst back then as Chinese President Xi urged the country to spend more efforts on blockchain-based technologies.
As you can see, the Golden Cross, which took place just a month ago, turned out to be a fake-out following today’s Death Cross. This phenomenon took place during 2015 as well before the real Golden Cross, which led to the 2017 bull market and the Bitcoin’s all-time high near $20,000.
Bitcoin’s price action has been particularly tumultuous throughout the past few weeks as the entire market was sent into massive volatility amid the coronavirus financial crisis.
Death Cross, most of the time, indicates entering a bear market. This comes in line with the horror expectations from Bitcoin to bottom below $3,700. However, as the above chart suggests, there might be fake-out, and as Bitcoin is also facing its first global financial crisis in its history, this might affect the situation. So far, Bitcoin has demonstrated an almost identical correlation with equity markets.
