Bitcoin’s Upcoming ‘Death Cross’ May Not Be Catastrophic for BTC Investors

Bitcoin is nearing the point of a ‘death cross’ event, yet an analyst argues that historical trends indicate this might not be as alarming as it appears.

Understanding the ‘Death Cross’ Pattern

A death cross signifies a bearish market signal that occurs when the 50-day simple moving average (SMA) drops below the 200-day SMA. Currently, Bitcoin’s 50-day SMA sits at $62,141 and is trending downwards, suggesting a potential crossover with the 200-day SMA at $61,676.

This upcoming crossover implies that Bitcoin’s short-term performance is lagging behind its long-term price momentum, often resulting in heightened anxiety and rash decisions among investors.

Historically, the death cross has not been a reliable predictor of future price movements. In many instances, it leads to what is known as a “bear trap,” which involves a market reversal that may compel traders to close their short positions to avoid mounting losses.

Analyst Timothy Peterson shared a historical chart indicating that following a death cross event, Bitcoin has shown a positive price trajectory one to two months later about 67% of the time. Peterson reported the following:

“Since 2015, after the death cross event, Bitcoin was up 62% of the time, with a median return of +18% over the following 60 days.”

The BTC/USD daily chart reveals that Bitcoin confirmed its most recent death cross on September 12, 2023, which led to a significant bear trap, causing BTC to reach a low of $24,000 the same day before initiating a sustained upward movement toward a new all-time high established on March 14, 2024.

This highlights the importance of not relying solely on the death cross as an indicator.

As of now, Bitcoin trades at $55,056, having struggled to surpass the resistance level at $56,000. There is speculation that BTC may revisit a recent low of $49,050.

Prospects of a ‘Super Bull Rally’ for Bitcoin

Trader Tardigrade posits that Bitcoin’s recent price dip to $49,000 is the commencement of an impending “super bull rally.” This perspective aligns with trends seen in previous market cycles.

In a post on X, Tardigrade referenced market behavior from 2013, suggesting that the current market situation mirrors the super cycle that occurred between 2016 and 2018, particularly noting a recent low that penetrated a crucial support line.

This historical comparison implies that Bitcoin could be poised for a substantial price surge in the coming years, with potential patterns observed in 2016 leading to a bullish market phase culminating in 2017. However, it is essential to be cautious as such patterns are rare and must be confirmed by current market conditions, especially since external economic factors could alter outcomes.

Nonetheless, Michael Nadeau, founder of DeFi Report, remains optimistic despite recent bearish events, likening the current setup to that of September/October 2020 when significant investments in Bitcoin were made.

“The situation feels reminiscent of the sentiment during the late 2020 rise following major investments.”

This content does not offer investment advice. Readers are advised to conduct their own research and consider the inherent risks in any investment strategy.