Bitcoin (BTC) Is About to Form a Death Cross, a Signal That Often Precedes Price Drops

Bitcoin's 50-day moving average is nearing a crossover below the 200-day moving average.

In the ever-evolving realm of cryptocurrency, technical indicators play a crucial role in guiding traders' decisions. Among these indicators, moving averages are widely used to identify trends and potential reversals.

One indicator that has gained notoriety in Bitcoin circles is the crossover of the 50-day moving average with the 200-day moving average. When the shorter-term 50-day SMA crosses below the long-term 200-day SMA, it is known as a Death Cross. Conversely, when the 50-day SMA moves above the 200-day SMA, it is called a Golden Cross.

These crossovers are often associated with significant shifts in momentum and have been a subject of interest among traders.

As we delve into the implications of this crossover, it's essential to consider the broader context of Bitcoin's price movements. After reaching a low of $15,500 in November 2022, Bitcoin experienced a strong recovery, eventually testing the $30,000 resistance.

After bouncing off the crucial support at $25,000, which had previously halted Bitcoin's decline from $48,000, the world’s leading cryptocurrency encountered another critical juncture at $35,000. This level had previously stalled Bitcoin's rally from the March 2023 lows.

As Bitcoin broke through the $35,000 resistance, it also formed a Golden Cross of the 50-day and 200-day exponential moving averages. This technical pattern is usually associated with the beginning of a strong uptrend in the market.

Later, as Bitcoin hit $61,000, it formed a Death Cross of the 50-day and 200-day exponential moving averages, a technical pattern that is often associated with the beginning of a bear market. However, despite forming a Death Cross, Bitcoin continued to rise.

The cryptocurrency's price movements are closely watched by traders, who are trying to anticipate the next big move. With Bitcoin now trading at around $81,897, down 6% over the last 24 hours, and its market cap at $1.7 trillion, every technical indicator is being scrutinized for clues.

One popular crypto trader, known online as Tony “The Bull,” has been keeping an eye on the 50-day and 200-day exponential moving averages.

When the shorter-term average crosses below the longer-term average, it is called a Death Cross and is said to be a bearish signal. However, according to “The Bull,” this crossover has not always led to major price drops.

In 2022, the 50-day exponential moving average dropped below the 200-day exponential moving average in mid-March. At the time, Bitcoin was trading at around $46,000.

This crossover, also known as a Death Cross, is said to be a bearish signal that can lead to further price declines. However, despite the crossover, Bitcoin continued to rise slowly for several months.

After reaching a high of around $57,000 in early May, Bitcoin experienced a major sell-off, falling to a low of around $25,000 by mid-June. This move wiped out nearly all of the gains that Bitcoin had made during the previous five months.

The main driver of this sell-off was the collapse of crypto exchange FTX. After a liquidity crisis, FTX went bankrupt in November 2022.

Following the steep correction, Bitcoin experienced a strong rebound, rising back to around $35,000 by mid-January 2023. From there, the cryptocurrency encountered strong resistance at $38,000, which stalled the rally.

After bouncing off the crucial support at $25,000, which had previously halted Bitcoin's decline from $48,000, the world’s leading cryptocurrency encountered another critical juncture at $35,000. This level had previously stalled Bitcoin's rally from the March 2023 lows.

As Bitcoin broke through the $35,000 resistance, it also formed a Golden Cross of the 50-day and 200-day exponential moving averages. This technical pattern is usually associated with the beginning of a strong uptrend in the market.

Later, as Bitcoin hit $61,000, it formed a Death Cross of the 50-day and 200-day exponential moving averages, a technical pattern that is often associated with the beginning of a bear market. However, despite forming a Death Cross, Bitcoin continued to rise.