Bitcoin’s ‘Death Cross’: A Long-Term Warning Signal
Bitcoin is once again displaying a technical warning signal known as the ‘death cross,’ an event that has historically preceded significant price drops. While the cryptocurrency market remains stable in the short term, traders are closely monitoring this bearish indicator on the weekly chart.
What Is a Death Cross?
The death cross occurs when the 10-week moving average falls below the 50-week moving average on Bitcoin’s price chart. Although this signal doesn’t predict exact timing, historical data shows it often precedes substantial market corrections. According to analyst AliCharts, Bitcoin has experienced a death cross recently, around December 8, signaling caution for traders.
Historical Context and Price Trends
Whenever Bitcoin has printed a death cross on a weekly time frame in the past, it has been followed by notable price corrections, often pulling back 50%–60%. For example, during the government shutdown in late 2019, Bitcoin fell more than 25% after a bearish crossover appeared on the charts. Today’s market setup, however, looks slightly different, as Bitcoin is already well below its October 2023 high of $126,000, currently stabilizing near $88,000.
Short-Term Resilience vs. Long-Term Signals
Despite the ominous death cross, Bitcoin is showing short-term strength. Over the past 24 hours, its price has risen by 1.61%, with the broader cryptocurrency market gaining 1.36%. Additionally, the recent expiration of Bitcoin options worth $1.87 billion on January 2 helped ease selling pressure, as BTC maintained a critical support level above $88,000.
Key Metrics Supporting Bitcoin Prices
Several metrics have contributed to Bitcoin’s current stability:
- Reduced Sell-Side Liquidity: About $480 million worth of BTC has left exchanges in the last 24 hours, with 10,700 BTC moving into long-term holding wallets over the past month.
- Stabilized ETF Flows: ETF flows have rebounded after mid-December outflows, providing additional stability to the market.
- Technical Indicators: The MACD crossover suggests weakening bearish pressure, while the RSI (49.52) has moved out of oversold territory. A price close above $89,500 could trigger algorithmic buying and further upward momentum.
Possible Scenarios Moving Forward
If Bitcoin fails to hold its current $88,000 level, historical patterns suggest it could retest support levels between $50,000 and $38,000. On the other hand, a strong defense by buyers, coupled with a break above $89,500, could soften or delay the impact of the bearish signal.
Product Recommendation
For those actively trading cryptocurrency, consider tools like the Ledger Nano X hardware wallet for secure storage of your Bitcoin. Its advanced features ensure the safety of your assets, keeping your private keys offline while offering convenience.
Final Thoughts
Bitcoin’s ‘death cross’ is a reminder of the market’s cyclical nature and the importance of staying informed. While short-term indicators look supportive, the weekly bearish signal warns of potential further downside. Traders should stay prepared for various scenarios and adjust their strategies accordingly.
