An ominous technical indicator called the ‘death cross’ is looming suggesting that the Bitcoin bull market could well be over. Cryptocurrency trader ‘Rekt Capital’ has observed the bearish signal stating “whenever a Death Cross occurs, BTC experiences deeper downside,”
A death cross is a technical chart pattern indicating the potential for a major sell-off or strengthening downtrend. It appears on a chart when an asset’s short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages.
#BTC is on the cusp of a potential Death Cross
Whenever a Death Cross occurs, BTC experiences deeper downside
How likely is it that this Death Cross occurs for $BTC?
And if it does – what should we potentially expect?
Here’s a thread with my thoughts about the Death Cross:
— Rekt Capital (@rektcapital) June 1, 2021
Bearish Trend Confirmation
The analyst stated that there is a lot of lag before a death cross occurs and a lot of the selling may already have taken place.
Since its $65K all-time high, Bitcoin has already lost 43.5% to current levels which is nothing out of the ordinary for correction sizes. However, the foreboding technical signal could mean that there is a lot more pain to come.
The analyst drew a comparison to the 2017 bull market and the time it took for the death cross to occur:
“When BTC peaked in 2017, it took 107 days for the Death Cross to occur. That’s 3.5 months. And during those 3+ months… Bitcoin dropped -70% from the $20,000 peak,”
He added that once the death cross happened in April 2018, Bitcoin experienced an additional -65% correction to the downside as it fell to $3,200 in December of the same year.
The mini-rally in mid-2019 was similar with the death cross showing 149 days after the peak. By this time, BTC prices had dumped 53%, but a further dump of 55% came after the cross.
History Repeating for Bitcoin?
The analysts attempted to predict when the death cross would occur:
“If history repeats, BTC could see its Death Cross occur sometime between very late July or in early September 2021,”
Using previous figures from previous cycles, he suggested that a 55% decline from a death cross appearing at around similar levels from the peak would send prices tumbling to around $18,000.
He added that a fall like this would return prices to the 200-week moving average which has traditionally been a major support and long-term buy zones.
“Which ties in with the 200-Week EMA which tends to offer fantastic opportunities with outsized ROI for BTC investors,”
At the time of press, BTC was trading flat on the day at $36,660 according to CoinGecko.