Bitcoin Forms Death Cross Pattern
Bitcoin has had a difficult time since hitting an all-time peak in mid-April. BTC is expected to depreciate for the third month in a row. The cryptocurrency has dropped to just around $31,000 in the last 24 hours, losing almost $2,000 from its intraday peak.
It has shed over 25% of its valuation in the last seven days. BTC recently created the feared death cross, which is much more concerning. While this generally means death for any asset, some analysts believe there is potential for Bitcoin.On Tuesday of last week, Bitcoin was traded at $41,250, after making a remarkable rebound in a week to appreciate by about $10,000.
Nevertheless, it has already given up these gains, and it was hovering at around $31,000 earlier today, a two-week low. Since reaching fresh highs two months ago, it has lost more than half of its worth. China, according to many observers, is to blame for the current drop.
The Asian country has strengthened its anti-BTC posture by barring banks from providing services to over-the-counter (OTC) marketplaces. Users who trade with BTC risk having their accounts closed and being reported to authorities, according to the country’s main banks and payment providers. This is on top of its ongoing crackdown on cryptocurrency mining.
China’s grip on Bitcoin is unyielding. According to Jeffrey Kleintop, the chief global investment strategist of Charles Schwab, an American investing platform:
“Maybe the fact that there’s a raid there detracts from its allure. I’m not convinced if that’s an indication of a longer-term shift in trend, but it may definitely cause some turbulence. Nobody knows how severe the enforcement would be, and China is a major player in the Bitcoin market.”
Other analysts feel the drop is not only due to China. According to Bloomberg, it might be due to a broader capital markets trend, according to CoinShares senior strategist Meltem Demirors. She thinks that, in light of recent market volatility and worries of financial turmoil, investors are shunning riskier investments, among which Bitcoin is at the number one spot.
“There is simply a lot of anxiety, and when people are afraid, they sell riskier assets. I believe Bitcoin is still seen as a high-risk asset. Broadly speaking, investors are wary.”
Bitcoin has established the death cross in its price decline, a market signal that generally indicates an asset’s demise. When a relatively short-moving average falls below a long-term average moving average, it is known as a death cross. It generally indicates a shift in price momentum and, quite often, a significant decline.
The 50-day simple moving average for Bitcoin dropped underneath the 200-day moving average. Nevertheless, there is reason to be optimistic about Bitcoin. Bitcoin created a death cross the previous time it did so in March 2020, after losing 60% of its valuation in two months.
Nonetheless, it soon began to retrace the direction, and within a short period of time, it had formed the golden cross (this is when the death cross is reversed). Almost the next year, it would increase by over 1,000%, reaching an all-time high.