Traders from the stock market to cryptocurrency rely on price and volume charts to gauge the value of an asset. Bitcoin is currently approaching the dreaded death cross — when charts reflect a “crossover” between the 50-day (short-term trend) and 200-day (longer-term trend) moving averages, as gracefully pointed out by CNBC.
While Bitcoin has already been trading in a bear market for 2018, the death cross [FIAT: $6,200] would mean that it would become more of a trend. Which could spell the end of BTC as we know it. At least that’s the hype behind the recent FUD put forth by mainstream media.
A chart by Coindesk below shows the 50-day moving average and 200-day moving average in which the author notes that the FUD put forth by MSM might be setting bears up for a trap who will be on the wrong side of the trade as BTC goes into a massive much-needed rally.
BTC price dropped below the 100-day moving average, which has caused some traders to be skittish. Some strategists are even saying that the death cross could yield a big sell-off in BTC, possibly to as low as $2,800, a level last seen in September 2017. To further push that fear uncertainty and doubt, Jim Iuorio of TJM Institutional Services told CNBC that despite the lack of historical evidence in Bitcoin trading –
“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.”
Others like “Fast Money” trader Brian Kelly points out that there seems to be an uptrend in the chart of Bitcoin that has been in play since August.
“Bitcoin, just like the spot FX markets, follows technicals closely, therefore these support levels gain more importance,” he wrote to CNBC. “If these levels hold, then it will confirm the uptrend from August is still valid,” Kelly said.
Technical analysis throws reason out the window and focuses on what drives the markets more than the why. It focuses on long-term charting data to determine where the price is headed and by how much if it was foolproof. The problem with applying technical analysis to Bitcoin is that cryptocurrency doesn’t have decades of trading history to draw an analysis from and has typically been unpredictable, let alone to draw a conclusion that BTC is crossing a “death cross.”
Historically, a death cross trading pattern in the stock market could be a “bullish contrarian indicator,” as the Wall Street Journal pointed out years ago.
If we examine the trading data, Bitcoin reached a death cross in 2015 when it was trading in the [FIAT: $200] range. However, in that same year, the Bitcoin price more than doubled to nearly $500. Bitcoin hasn’t touched on a death cross since that time.
Bitcoin has plunged about 38% year to date, but would still need to fall another 88 percent to erase all of the 2017 gains.
Another few factors that may be attributing to the current downtrend in cryptocurrency markets – Reddit no longer accepting Bitcoin, and a memo of the Bank of Montreal (BMO) banning its customers from using accounts to transact with cryptocurrency.
But in almost sure certainty the markets correlate to when MSM opened its big mouth and flashed “Bitcoin Death Cross” across trader’s television screens. It is highly unlikely that BTC plunges down to zero and MSM should just keep dreaming about Bitcoin being a traditional bubble.
Bitcoin is currently trading at [FIAT: $6,939.81] down -7.30% according to Coin Market Cap at the time of this report.
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