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Bitcoin, the leading cryptocurrency, is on the cusp of a much-feared death cross, according to Barchart.
The ominous pattern is about to emerge after the cryptocurrency’s short-term gains have failed to surpass its long-term gains. To be more precise, this pattern tends to appear after the 50-day moving average falls below the 200-day moving average.
A death cross is generally believed to mark the start of a brutal market downtrend. However, just like a golden cross, it tends to be a lagging indicator since averages are based on past data.
In some cases, the death cross can end up being a false signal if there is no decisive bearish reversal. For instance, Bitcoin recorded a death cross in March 2020 only to hit a new all-time high later that year. The cryptocurrency also recorded a death cross in June 2021 but managed to surge to a record peak just months after that event.
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Most traders have to rely on a combination of different patterns in order to be able to see some directional signals.
Is the worst finally over?
Earlier this week, the price of the leading cryptocurrency crashed below the $50,000 level for the first time in months due to the global stock market crash. As a result, market sentiment plunged back into extreme fear territory.
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However, the flagship cryptocurrency managed to rebound sharply on Tuesday, surging back to $57,000. It is currently changing hands at $57,218, according to CoinGecko data.
According to independent financial research boutique Fundstrat, the worst might be already over for markets after a strong Thursday rally. “.. And we also view this panic as ultimately being a growth scare (coupled with a carry trade unwind,” the firm added.
