Bitcoin Weeks Away From Its First Weekly “Death Cross” Chart

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Things could soon go from bad to worse for bitcoin (BTC) traders looking for bullish hints on technical charts.

The cryptocurrency’s 50-week simple moving average (SMA) is falling rapidly and is expected to break below the 200-week SMA for the first time on record.

According to technical analysis theory, the bearish intersection of the two averages, often referred to as the death cross, signifies that the market is about to head into a free fall.

Bitcoin has fallen 75% since hitting a record high of $69,000 in November last year. The bear market proved to be more intense than previous ones in which sellers failed to gain a foothold below the 200-day SMA.

Bitcoin’s weekly chart shows a near-death cross, the first in the cryptocurrency’s 13-year history. (TradingView)

Critics of technical analysis would point out that the death cross, whether it occurs on the daily or weekly charts, is a lagging and unreliable indicator. This is largely true, as the indicator is based on looking back moving averages and reflects past performance of the asset.

The death cross has a bad reputation for trapping sellers on the wrong side of the traditional finance market. And that has been the case for bitcoin traders in the past. For example, the death cross on the March 2020 daily chart marked a major price low.

Seasoned traders therefore read the death cross in conjunction with other chart factors and fundamental indicators, which are divided on the next possible move in bitcoin.

According to Delphi Digital, bitcoin sideways trading in the $16,500-$17,300 range following the FTX crash offers little hope for bulls.

“We still believe this zone does not have much structural support, and in the face of further contagion and uncertainty, we remain cautious as we monitor the $9,000-$13,000 level,” the strategists wrote. Delphi, edited by Andrew Krohn, in a note to clients.

Several miners or coin minters are at risk of bankruptcy in the first half of next year, pushing bitcoin to $12,000 and below. Add to that the Federal Reserve’s lingering anti-stimulus bias and the path of least resistance appears to be on the downside.

That said, bitcoin has historically bottomed to start a new rally 15 months before the mining reward halving, a scheduled 50% reduction in the pace of supply expansion every four years.

The next bitcoin halving is scheduled for March/April 2024. If history is any guide, bitcoin’s bear market may have ended in November at $15,473 and the cryptocurrency could climb as high as at $63,000 before the halving.

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