It looks like things could get even worse for traders looking for signs of an uptrend in technical analysis. Bitcoin has never seen a death cross on its weekly chart before. An ominous indicator that has a bad reputation for trapping sellers on the wrong side of the market!
To the report CoinDesk Bitcoin’s 50-week SMA is falling rapidly and looks set to break below the 200-week SMA for the first time.
According to the theory of technical analysis, the downward crossing of these two moving averages, which is often referred to as the death cross, means that the market is on a downward slope.
The price of Bitcoin has fallen by about 75% since reaching its record high of $69,000 in November last year. A bear market in which sellers fail to stabilize below the 200-day moving average has proven to be more severe than past bear markets.
Critics of technical analysis point out that a death cross, regardless of whether it occurs on daily or weekly charts, is a lagging and unreliable indicator. This argument is largely true because this indicator is based on a retrospective moving average and reflects the past performance of the asset price.
Death Junction has a bad reputation for trapping traders on the wrong side of traditional financial markets, and has done so with Bitcoin traders in the past. For example, the death intersection on the daily chart in March 2020 (March 2019) marked the bottom of the market price.
Therefore, experienced traders examine the Death Cross indicator along with other chart and fundamental indicators that can determine the likely direction of Bitcoin price movement.
According to Delphi Digital, Bitcoin’s volatile trading in the $16,500-$17,300 range after the fall of the FTX exchange was not very promising for the bulls.
Delphi strategists, led by Andrew Krohn, wrote in a note to clients:
We still believe that this area does not have much structural support, and in the face of the spread of the crisis and more distrust, we remain cautious of a price decline to the $9,000-$13,000 level.
Many miners will likely go bankrupt in the first half of next year, causing the price of Bitcoin to fall to $12,000 or less. Adding in the Fed’s dovish bias, it looks like there isn’t the slightest bit of resistance on Bitcoin’s downside.
However, Bitcoin has bottomed out in the past 15 months before the next halving – a planned 50% reduction in the rate of increase in supply every four years – and started a new uptrend.
The next bitcoin halving will be done in March or April 2024 (March 1402 or April 1403). If history is any guide, Bitcoin’s bear market likely ended in November (Aba) with a low of $15,437, and the digital currency could reach $63,000 before the halving.