Looming ‘Death Cross’ Could Signal Bitcoin Bear Market

A death cross occurs when the 50-day moving average crosses below the 200-day moving average.

AccessTimeIconJun 9, 2021 at 7:29 p.m. UTC
Updated Sep 14, 2021 at 1:09 p.m. UTC

The "death cross," a bearish technical signal biw looming in price charts, could point to trouble ahead for bitcoin (BTC) amid regulatory crackdowns and environmental concerns.

A death cross occurs when the 50-day moving average crosses below the 200-day moving average. If that happens, bitcoin could enter bear market territory similar to what happened in 2018.

Previous death crosses resulted in additional price declines of 70% in 2018 and 47% in 2019. The death cross in 2020 occurred shortly after the coronavirus pandemic-induced market crash in March, which proved to be a lagging signal at that time.

“Speculative reports suggest that bitcoin could soon drop to $20,000 referencing the looming bearish cross of the 50 and 200 daily moving averages,” Stephen Kelso, head of markets at brokerage firm ITI Capital, wrote in an email to CoinDesk.

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Bitcoin daily price chart shows historical death cross cycles.

Bitcoin appears oversold on the daily chart and is up about 13% over the past 24 hours, marking the biggest gain in two weeks. Wednesday's price bounce occurred despite a slew of negative headlines from China including crackdowns on money laundering and mining shutdowns.

The looming death cross could limit upside moves. Resistance is seen around $40,000, which has capped short-term price rises over the past week. Although the sell-off from May is stabilizing, the longer-term technical outlook appears less bullish.

For now, buyers are defending short-term support above $30,000. A relief rally is typical after the price crosses below the 50-day moving average. Afterwards, a series of lower price highs typically confirms a shift from a bullish to bearish trend.


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