Bitcoin has once again flashed another particularly deadly formation that often sends its price into a downward spiral. This time around, a death cross that has not been seen in the digital asset for more than one year has appeared again. This report takes a look at what happened the last time that this particular death cross was flagged.
Bitcoin Flashes Rare Death Cross
In a post on X (formerly Twitter), pseudonymous crypto analyst Game of Trades has alerted the Bitcoin community to an interesting formation on the BTC chart. The infamous death cross appeared just as the digital asset started marking its support above $25,800, sparking interest.
According to the analyst, this death cross is formed when the 50-day moving average crosses below the 200-day moving average, which took place on Wednesday, September 13. While death crosses can appear on the charts of digital assets fairly often, this one is important due to its implications.
The last time the 50-day moving average for Bitcoin had crossed below the 200-day moving average was back in January 2022. Following this formation, the price of the digital asset plunged rapidly, and by the time it was done in June, the BTC price had already lost over 60% of its value.
While this could very well be the case with Bitcoin this time around, the analyst pointed out that death crosses do not always mean the price would start falling right away. There have been instances where death crosses have appeared and the asset still went on to rally a bit before eventually falling.
Pointing to the times when such a thing has taken place, Game of Trades said, “April 2014 – Bitcoin saw upside first, followed by significant downside. Sept 2015 – Bitcoin saw no major downside following the death cross.”
What Happens To BTC If This Death Cross Follows 2022?
The price of Bitcoin is already trending low from its current level, so adherence to the January 2022 death cross would be devastating for its price. A 60% drop from the $26,300 that BTC is trading at the time of this writing would mean marking a brand-new cycle bottom.
However, in response to this, another crypto analyst known as @BigCheds on X points out that the death cross could be invalidated if the digital asset is able to hold above $25,000. So it is possible that nothing eventually comes of this formation, as can be the case sometimes.
If $BTC holds 25k nothing else matters
— Cheds (Trading Quotes) (@BigCheds) September 14, 2023
Even though the death cross was flagged on Wednesday, the price is still holding well above $26,300 as of Thursday morning. This could suggest that there is enough demand in the market to neutralize such a bearish formation.