- The global Bitcoin community is currently debating what the unpopular death cross on the daily chart means for Bitcoin’s directional bias.
- In an article released by Bloomberg, the billionaire investor Mark Cuban highlighted that while the death cross is commonly interpreted to represent a potential sell-off, this is not always the case.
- On Saturday, Bitcoin enthusiasts, traders, and analysts fell into a heated up debate over what should be expected from the forming death cross.
For the last two days, news headlines, forum posts, and Twitter conversations have focused on the death cross (a technical pattern) that has appeared on Bitcoin’s daily chart. Mark Cuban, a billionaire investor, was featured on an article published by Bloomberg to address this death cross. The death cross happens when a short-term moving average crosses below a long-term moving average. In this case, the 50 sma seems to be crossing below the 200 sma as seen below;
The death cross appears on a chart when a stock’s 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 doesn’t 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 Krüger recently discussed the situation of a death cross in relation to BTC/USD charts.
“The Death Cross takes place when the 50 day moving average crosses below the 200 day moving average,” Krüger tweeted. “The 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,” Krüger stressed.
The popular creator of the bitcoin stock-to-flow model, Plan B, also tweeted about the infamous death cross on Saturday. “Study this chart to see what happened [the] last two times the death cross happened, Q4 2019 and Q1 2020,” Plan B said to his 566,000 followers.
However, an individual named Mohit Sorout responded to Plan B’s tweet and noted that there’s been a number of death cross occasions throughout bitcoin’s lifetime.
“There have been 6 past death crosses in bitcoin’s lifetime,” Sorout replied to Plan B. “4 have resulted in enormous downside. The two that didn’t lead to a downtrend were towards the end of a bear market, not after a full blown bull run. Choose your bias wisely,” he added.
Bitcoin Traders Hope a 2013 Double-Top Pattern Emerges
The creator and host of CNBC’s Crypto Trader show Ran Neuner also wrote about the death cross on Saturday too. “Bitcoin shorts are being closed,” Neuner said. “This is confirmation that the shorts were speculative and that it wasn’t miners hedging. We said this would happen in anticipation of the ‘death cross’ that should cross around the 24th June. Expect more FUD. I’m not selling.”
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. “Death cross,” Sultan wrote. “Ironically, 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,” he added. Another person wrote to Plan B and said:
A real death cross is when both MA’s 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. “Only a fool could deny that this Bitcoin DeathCross is more like a bearish cross in red than a bullish one in green,” Hostetler said. “But I do like how the BTC price fell this week, as if to say ‘let’s get it over with, then we can rise’”
“In the end, the cross changes little,” Hostetler further stressed. “Big question remains: has this halving cycle peaked? 2 weeks ago I would’ve assigned that a 1% possibility, because I hadn’t 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,” 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? join the bits.africa community to share your view and review other enthusiasts’ opinions.