A cryptocurrency analyst has highlighted a recent technical crossover in Bitcoin that has historically signaled bearish trends. Bitcoin has experienced a “death cross” between its 21-day and 50-day simple moving averages (SMAs).
In a post on X, analyst Ali Martinez shared a daily Bitcoin price chart illustrating this recent crossover. Simple moving averages smooth out price data over a specific period, helping to identify long-term trends by filtering out short-term volatility.
The chart shows Bitcoin’s 21-day SMA dropping below its 50-day SMA. Historically, this crossover has acted as a “death cross” for Bitcoin, often preceding significant price declines. Past instances highlighted on the chart show drawdowns ranging from 54% to 69% following the signal. The most recent occurrence in 2022 led to a nearly 66% drop to the bear market low.
It remains to be seen whether this pattern will repeat. If bearish momentum follows, Bitcoin could risk falling below an on-chain level known as the Realized Price-to-Liveliness Ratio, which is currently around $87,500. This ratio compares the average cost basis of Bitcoin investors with the spending and holding behavior of long-term holders.
Martinez noted that the last time Bitcoin fell below this ratio, it declined toward the Realized Price, which is currently at $56,000.
At the time of writing, Bitcoin is trading around $89,500, up 2% over the past week.
Frequently Asked Questions
FAQs The Bitcoin Death Cross
Q1 What is a Death Cross in simple terms
A Its a chart pattern where a cryptocurrencys shortterm average price falls below its longterm average price Its seen by some traders as a potential signal for a longerterm downtrend
Q2 Why is everyone talking about it now for Bitcoin
A Because this pattern has just reappeared on Bitcoins price chart Its getting extra attention because the last time it happened it preceded a significant price drop of about 66
Q3 Does the Death Cross guarantee Bitcoins price will crash
A No it is not a guarantee It is a lagging indicator based on past prices not a crystal ball While it can signal bearish momentum it has also been followed by periods of consolidation or even rallies in the past Its one tool among many
Q4 What happened after the last Bitcoin Death Cross in 2022
A Following the January 2022 Death Cross Bitcoins price entered a prolonged bear market eventually falling roughly 66 from its level at that time to its cycle low in November 2022
Q5 As a beginner should I sell my Bitcoin because of this
A Making a panic sell based on one indicator is generally not advised especially for beginners The Death Cross is better used by traders for timing within a broader strategy Longterm investors often focus more on fundamentals and their own risk tolerance than on technical patterns alone
Q6 Whats the opposite of a Death Cross
A The opposite is called a Golden Cross This occurs when the shortterm moving average rises above the longterm average and is traditionally viewed as a bullish signal for a potential uptrend
Q7 What are the main criticisms or problems with relying on the Death Cross
A The two biggest criticisms are
1 Its a lagging indicator It confirms a trend that has already happened so you might miss the early part of a move
2