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On Saturday, cryptocurrency analysts and traders have been discussing bitcoinâs recent chart patterns and the infamous death cross pattern has been a topical conversation. A number of traders believe when bitcoinâs short-term moving average (MA) dips below the long-term MA, the crypto asset could be bracing for a major sell-off. Meanwhile, others are sure the death cross technical pattern means the price is due to rebound and possibly double-top to higher values than the previous all-time high.
The Return of the Infamous Death Cross
On June 19, a number of Twitter conversations, forum posts, and even headlines discussed the technical pattern called the death cross in regard to bitcoinâs (BTC) chart. Bloomberg published an article concerning the death cross on Saturday and the publication featured a few statements from billionaire investor Mark Cuban. The definition of a death cross stemming from Investopedia notes the pattern suggests âthe potential for a major sell-off.â The websiteâs definition adds:
The death cross appears on a chart when a stockâs short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages.
However, the death cross doesnât necessarily mean a bearish market is due. Investopedia details that death cross events led to traditional stock market crashes during the past century including 1929, 1938, 1974, and 2008. Death crosses are not unusual and data from Canterbury Investment Management indicates the Dow Jones Industrial Average has experienced 84 death crosses since 1929. The popular economist and trader Alex KrĂŒger recently discussed the situation of a death cross in relation to BTC/USD charts.
âThe Death Cross takes place when the 50 day moving average crosses below the 200 day moving average,â KrĂŒger tweeted. âThe Death Cross takes place when the 50 day moving average crosses below the 200 day moving average. Journalists love writing about how a death cross could bring forth a bear market. However, one week historical returns following a bitcoin death cross are POSITIVE. Relax,â KrĂŒger stressed.
Picture via Alex KrĂŒger on Twitter.
The popular creator of the bitcoin stock-to-flow model, Plan B, also tweeted about the infamous death cross on Saturday. âStudy this chart to see what happened [the] last two times the death cross happened, Q4 2019 and Q1 2020,â Plan B said to his 566,000 followers.
Picture via Plan B on Twitter.
However, an individual named Mohit Sorout responded to Plan Bâs tweet and noted that thereâs been a number of death cross occasions throughout bitcoinâs lifetime.
âThere have been 6 past death crosses in bitcoinâs lifetime,â Sorout replied to Plan B. â4 have resulted in enormous downside. The two that didnât lead to a downtrend were towards the end of a bear market, not after a full blown bull run. Choose your bias wisely,â he added.
Bitcoin Traders Hope a 2013 Double-Top Pattern Emerges
The creator and host of CNBCâs Crypto Trader show Ran Neuner also wrote about the death cross on Saturday too. âBitcoin shorts are being closed,â Neuner said. âThis is confirmation that the shorts were speculative and that it wasnât miners hedging. We said this would happen in anticipation of the âdeath crossâ that should cross around the 24th June. Expect more FUD. Iâm not selling.â
Picture via Sultan on Twitter.
A crypto enthusiast called Sultan discussed the death cross situation with his followers as well and said that it may mean the worst is behind us. âDeath cross,â Sultan wrote. âIronically, death crosses are often a sign that the worst is already behind us. At the 2019 DC, Bitcoin had already went through a -47% dip before the DC flashed, with a 52% recovery after. And a -64% dip before the 2020 DC, with a quick 150% recovery,â he added. Another person wrote to Plan B and said:
A real death cross is when both MAâs are facing down. Good luck to anyone trading the current cross on BTC.
No one really knows what will happen even though a number of traders are confident their predictions will play out. Investor and market watcher John Hostetler also talked about the death cross scenario as well on Saturday. âOnly a fool could deny that this Bitcoin DeathCross is more like a bearish cross in red than a bullish one in green,â Hostetler said. âBut I do like how the BTC price fell this week, as if to say âletâs get it over with, then we can riseââ
âIn the end, the cross changes little,â Hostetler further stressed. âBig question remains: has this halving cycle peaked? 2 weeks ago I wouldâve assigned that a 1% possibility, because I hadnât looked at the now-dismal chart of Bitcoin S2F multiple in a while. Since then I have raised the odds to ~20%. But that still leaves 80%. So I continue with the Bitcoin double top model, drawing hope from the summer of 2013, when $BTC came within a breath of a Death Cross: grey arrow on the chart,â he concluded.
What do you think about the bitcoin death cross chart pattern? Do you expect a bear market or a bull market going forward? Let us know what you think about this subject in the comments section below.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.