What Would a Death Cross Mean for Bitcoin (BTC) Prices?

Mohit Oberoi, CFA - Author

Jun. 18 2021, Published 7:28 a.m. ET

Bitcoin (BTC) prices have been volatile in 2021. The cryptocurrency went on to hit an all-time high and almost $65,000 but soon tumbled below $30,000. Whereas Bitcoin has since recovered, there are fears of a “death cross” price formation. What's a death cross, and what does it mean for Bitcoin?

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When analyzing an asset, we look at its fundamentals or technicals. Fundamental analysis involves studying the business and it financials, while technical analysis is based on stock chart patterns.

What's included in technical analysis

In technical analysis, traders look at indicators. These include trend reversals, RSI (relative strength index), Bollinger Bands, and simple MAs (moving averages) such as MACD (moving average convergence divergence) and MA crossovers.

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What's a death cross?

A death cross, which confirms a bearish bias and is seen as an indicator of long-term bearishness in an asset's price, is when an asset’s short-term, 50-day MA crosses below its long-term, 200-day MA. It's a lagging indicator, as it occurs after a stock has traded weakly. Either the SMA or EMA (exponential moving average) can be used for analysis.

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If the crossover is accompanied by high trading volumes, the indicator is confirmed.

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What the golden cross means for prices

The opposite of the death cross is the golden cross, when a stock’s 50-day MA crosses above its 200-day MA. It's seen as a bullish indicator and often precedes a spike in prices. Quant traders and funds often use MA crossover strategies and watch for death and golden crosses to decide when to buy or sell.

Bitcoin prices have been volatile

A death cross occurs when an asset falls after following an uptrend for a long time, as we’ve seen with Bitcoin and other crypto assets in 2021. China's cryptocurrency policy tightening and Elon Musk’s changing views on Bitcoin have created significant turbulence in cryptocurrency prices.

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Will there be a Bitcoin death cross soon?

A death cross for Bitcoin seems imminent. Its 50-day SMA is getting close to its 200-day SMA, and may soon breach it. Bitcoin was trading lower on Jun. 18, though it's seeing some support from crypto hodlers.

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What could a death cross mean for BTC?

According to Kraken Research, Bitcoin's previous death cross led to “a sell-off in the days that followed or a continued macro downtrend that confirmed a bear market.” Also, given that cryptocurrencies move on technicals and sentiment rather than real fundamental value, a death cross could trigger further selling.


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