What's going on the crypto market. What is death cross, let's talk about it.
If you are reading this post then most probably you are involved in crypto related things and want to know about current situation of the crypto market.
Bitcoin is trading below $7000
What is deathcross
Deathcross is a sign of long term bear market going forward. When the 50 day Moving Average (MA) cross below the 200 day MA is named Deathcross because it creates a cross ( X ) shape. Deathcross is considered as decline in short-term changes and results losses as investors move away from their investments.
"In short we can say, Deathcross is a signal of bearish market."
Below is the chart showing Deathcross or 200 day MA and 50 day MA
As we can see that the 50 days MA is very near to cross the 200 days MA. Which is likely that, it will cross in 24-48 hours if the market goes like this.
Some strategists/analysers are saying that the Deatchcross could make a big sell off of bitcoin and that can led the price of bitcoin to near $2800.
Here are some views shared by experts, we can say.
Jim Iuorio of TJM Institutional Services told CNBC
“[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.”
Digital asset fund manager Brian Kelly write
“Bitcoin, just like the spot FX markets, follows technicals closely, therefore these support levels gain more importance. If these levels hold, then it will confirm the uptrend from August is still valid.”
To cut a long story short, BTC had to drop by $14,000 (from $20,000 to $6,000) to push the 50-day MA so far towards the 200-day MA. Hence, it's likely that the bears will run out of steam by the time the actual death cross occurs.
In fact, it could end up being a bear trap, at least in the short term. And the historical data seems to support the argument, as explained below.
BTC bottomed out at $340 (April 11, 2014) immediately after death crosses were confirmed (see hand icons on chart) and had rallied to $680 by June 2014. Note, the RSI showed oversold conditions when the death cross happened, hinting at the rally to come.
Another more severe death cross occurred in early September 2014 and, by January 2015, bitcoin had dropped more than 65 percent to $170. Back then, the RSI was bear biased and holding well above the oversold territory.
Meanwhile, the death cross seen in mid-September 2015 was a big failure. BTC had already bottomed out at $162 in mid-August and continued to rise after confirmation of the cross signal.
So, the death cross failed to yield a big sell-off in two out of the last three events, and the odds are high that it would end up being a bear trap for the third time.
One more thing i want to make all of you read about is Golden cross. Golden cross is opposite of the death cross. It happens when 50 days MA cross above the 200 days MA, which shows a high support to the bull market.
It's not confirmed that Deathcross will cause huge losses and a bearish run. May be it just go above after touching the line. So there is still so many hopes that it couldn't be a bearish trap.
Best Of Luck :)
Please do not take it as a financial advise. THIS IS NOT A BUY REQUEST. It is just my analysis,opinion and result of readings. So before investing in any Crypto currency, do your own research first. I will not be responsible for any losses
Thanks for reading...
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