This Is What Historical Data Says About Bitcoin’s Imminent Death Cross
According to crypto analyst Lark Davis, Bitcoin is about to record the ninth death cross in its short history. The “death cross” is considered a bearish signal, and appears when the daily moving average (MA) 50 falls below the daily (MA) 200.
According to the analyst, there have been eight death crosses in the history of BTC, with four bottoms and four prior selloffs ranging between 30% and 65%.
#bitcoin The very apprehensive “Death Cross” is about to hit… but does it matter?
Well, there have been 8 death crosses in the history of BTC. 4 marked the bottom (almost), and 4 came before 30, 60, 61 and 65% selloff.
What will happen to us in Death Cross number 9? pic.twitter.com/RHmE3ulEMp
— Lark Davis (@TheCryptoLark) 13 January 2022
That said, the technical indicator’s history of predicting bear markets is uneven, with a 50% success rate. The previous death crosses, which took place in 2014 and 2018, were followed by selloffs.
However, on the other hand, the death crosses seen in June 2021, end of March 2020 and October 2019 were bear traps or false signals indicating key price downside. The death cross in October 2019 triggered a 42% pump the day before, while the consolidation after the death cross in June 2021 ended in a new bull run.
Since moving average crossovers are based on backward looking data and thus are backward indicators, they cannot be employed as standalone indicators. By the time the crossover is confirmed, the market is often oversold and due for a bounce, as happened in late June 2021 and March 2020.
As previously reported by U.Today, bitcoin hit a high of $44,342 on January 12 following the release of the latest inflation data. The Consumer Price Index increased by 7% during the year since December, the highest since June 1982.
Analysts Consider that the next stop for bitcoin could be a retest of $46K. At the time of publication, bitcoin was trading at $43,978, up 2.61% over the past 24 hours, according to data from Coinmarketcap.
bitcoin (btc) price action
Bitcoin (BTC) is recovering after crossing the $40,000 support level for the first time since September 2021, hitting a low of $39,650 on January 10. A rebound to $40,000 is in line with a bullish Dragonfly Doji candlestick acting as strong support. The risk to this approach remains, although the pair can be range bound in the next few days.
The rally in the price may continue to erase the losses for the third day in a row. Therefore, the outlook has turned neutral, with the moving average (MA 50) about to cross below the moving average (MA 50) to form a “death cross”. That said, a sustained break below $40,000 would be required to confirm the continuation of the downtrend.
On the upside, the first hurdle for the bulls could be the $45,000 area. If they cross it, the next target would be the $48,000 area, where another positive break could open the door for a test of the psychological zone at $50,000.