Bitcoin has once again shown a dangerous formation known as the death cross, which often leads to a decline in its price. This specific death cross has not been seen in over a year. Let’s take a look at what happened the last time this formation occurred.
Bitcoin Flashes Rare Death Cross
A pseudonymous crypto analyst, Game of Trades, recently alerted the Bitcoin community to an interesting pattern on the BTC chart. The infamous death cross appeared just as the digital asset had reached a support level above $25,800, catching people’s attention.
The analyst explained that the death cross forms when the 50-day moving average crosses below the 200-day moving average, which occurred on Wednesday, September 13. While death crosses are relatively common in the charts of digital assets, this one is significant due to its implications.
The last time Bitcoin experienced a death cross was in January 2022, when the 50-day moving average crossed below the 200-day moving average. Following this occurrence, the price of Bitcoin sharply declined, losing over 60% of its value by June of that year.
However, the analyst pointed out that death crosses don’t always lead to an immediate price drop. There have been instances in the past where death crosses occurred, but the asset rallied before eventually falling. Examples include April 2014 and September 2015.
What Happens To BTC If This Death Cross Follows 2022?
The current price of Bitcoin is already trending downwards, so if the death cross follows the pattern seen in January 2022, it could have devastating effects on the price. A 60% drop from the current level of around $26,300 would indicate a new cycle bottom for BTC.
However, another crypto analyst named @BigCheds on X suggests that the death cross could be invalidated if Bitcoin manages to stay above $25,000. So, it’s possible that this formation may not have a significant impact, as is sometimes the case.
If $BTC holds 25k nothing else matter
Despite the death cross being identified on Wednesday, the price of Bitcoin is still holding above $26,300 as of Thursday morning. This indicates that there might be enough demand in the market to counteract the bearish formation.
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