BITCOIN prices dropped again last night as fears the crypto-bubble is finally about to burst spooked traders - sending the prices plunging once again. Why is BTC falling today and will it crash below $7k?
There appears to be no recovery in sight for bitcoin, as prices continue to slide past the $7000 mark, trading as low as $6,970.15, at 12:30 pm on March 30.
All cryptocurrencies are spiralling down into the red this morning, as news proves that almost 40 percent of the total market cap has been lost since January 1.
The chaotic week for crypto trading has plunged the entire market into a large-scale sell-off, forcing prices lower across a 24-hour period.
The bearish trend has worried investors overnight, bringing the coin worryingly close to the dreaded “Death Cross”.
What is a Death Cross?
A death cross is a point in a stocks lifetime where the 50-day moving average (MA) crosses below the 200-day MA, usually resulting in a long-term bearish trend in the future.
In short, bitcoin’s price has fallen in a 50-day period as much as it would usually fall across the last 200-day period.
The death cross can often mean the death of a stock's potential, as algorithms and investors write-off the stock as unreliable.
For bitcoin, this threshold is perilously close, causing a panic in the crypto-market.
A death cross could result in a mass sell-off from investors, dropping the price to as low as $2,800, according to some strategists.
"When we are talking about bitcoin, I think it's important to remember that we don't have much history to go off of to identify long-term trends," Jim Iuorio of TJM Institutional Services told CNBC.
"That being said, any time the 50-day crosses the 200-day, it should flash a warning…and when you couple that with the fact that bitcoin has been trending steadily lower since the launch of futures, I think that it is a major negative.”
Why is bitcoin falling?
Cryptocurrency is still under intense scrutiny amid regulation threats and the continued Facebook data saga.
The bearish trend has shrouded cryptocurrency in uncertainty, with investors wary of regulation and the rise in rival coins cutting bitcoin’s potential.
But it is not all doom and gloom for BTC.
The currency was close to the death cross before, back in September 2015, but managed to rally back up to nearly $500 from a low of $230.
Analysts suggest that this drop could actually result in an uptrend if investors manage to hold on.
The bearish trend is likely to tail off before it ever hits the death cross because of the sheer drop required to reach it.
BTC had to drop by $14,000 (from $20,000 to $6,000) to drag the 50-MA don towards the 200-day MA.
Historically speaking, bitcoin has rebounded back higher each time it has come close to the crossover - which is seen as a positive sign for stabilisation.
If bitcoin falls below $7,200, it will likely result in a death cross but it is highly possible investors will hold on and oversell, similar to the trend previously seen in 2015.
A beartrap could therefore occur, where the bears are caught on the wrong side of the trade and the price will bounce back.
Source: https://bit.ly/2J1CYV8