It has been quite a rough start this year for Bitcoin 2022 as BTC price corrected more than 10% in the first 12 days of January. On the technical chart, Bitcoin is approaching a death cross pattern suggesting that we may be heading towards further pains ahead.
The cross of death occurs whenever the price of an asset over the past 50 days falls below its 200-day moving average. This signals that momentum is heading down. Mati Greenspan, founder of Quantum Economics noted that Bitcoin is heading towards a similar death cross pattern later this week. “The chart is pretty clear,” he said.
Bitcoin’s track record around the Death Cross
Although the death cross indicator shows a bearish momentum, Bitcoin’s track record with the death cross remains mixed. Bitcoin overcame the cross risk throughout March 2020 and June 2021 and then rallied higher to form a golden cross. However, in November 2019, Bitcoin started trading lower a month later after the sign of death. Speaking on the matter, Greenspan told Bloomberg:
“Some say it is bearish, but for Bitcoin, almost all previous gold crosses or death trades have proven to be a good buying opportunity, along with any other indicators. No other notice to those who join before 2021.”
Juthica Chou, head of OTC options trading at Kraken also added: “History is actually contradictory – it is not surprising that several macro contexts are influencing price action, but we did saw a healthy bounce in the last 24 hours. And I think the fundamentals are still really strong.”
After going down last week, Bitcoin has shown green shoots over the past two days. Moving away from the cross of death, Bitcoin rallied 5% from the $40,000 support. Thanks to the powerful miner accumulation! As of press time, Bitcoin is trading at $42,698 with a market cap of $806 billion.