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The “death cross,” a bearish technical signal looming in price charts, could point to future problems for bitcoin (BTC) amid regulatory crackdowns and environmental concerns.
A death cross occurs when the 50-day moving average drops below the 200-day moving average. If this happens, bitcoin could enter bear market territory similar to what happened in 2018.
Previous death crosses resulted in further price cuts of 70% in 2018 and 47% in 2019. The death cross in 2020 came shortly after the market crash induced by the coronavirus pandemic in March, which turned out to be a late signal at the time.
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“Speculative reports suggest bitcoin may soon drop to $ 20,000, referring to the impending bearish cross of the 50 and 200 daily moving averages,” Stephen Kelso, head of markets at brokerage firm ITI Capital, wrote in a email to CoinDesk.
Bitcoin appears oversold on the daily chart and has risen by around 13% in the past 24 hours, marking the biggest gain in two weeks. Wednesday’s price rebound came despite a series of negative headlines from China, including crackdowns on money laundering and mining closures.
The cross of imminent death could limit upward movements. Resistance is around $ 40,000 which has capped short term price increases over the past week. While May’s massive sales are leveling off, the longer-term technical outlook looks less optimistic.
For now, buyers are arguing for short-term support above $ 30,000. A rally of relief is typical after the price drops below the 50-day moving average. Thereafter, a series of lower price highs usually confirms the shift from an uptrend to a downtrend.
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