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Its average price over the last 50 days has fallen below its 200-day moving average, signaling impending losses.
After a spate of news regarding renewed crackdowns from China led to a bitcoin sell-off, cartographers and analysts are turning to a seemingly ominous technical signal.
The original cryptocurrency has formed a death cross, which means that its average price over the past 50 days has fallen below its 200-day moving average. The index is usually seen as a closely watched technical metric that can provide a hint of more pain in the future.
Many analysts predicted that the coin, amid the recent pullback that saw a 40% loss over the past two months, would form a bleak pattern.
But there is reason to believe that the formation this time around may not be bearish to indicate that the 200-day moving average is still rising, according to Matt Malley, chief market strategist for Miller Tabak + Co. “When it starts to decline, that will be more convincing.”
In fact, Bitcoin’s March 2020 death cross marking proved no impediment to gains as it turned higher and formed a golden cross (on a pattern reversal) two months later. But the November 2019 death cross saw the currency’s circulation plummet one month later.
Bitcoin fell on Monday to its lowest level in two weeks, falling 11.4% at one point to $ 31,735, after China announced that it had summoned officials from its largest banks to a meeting to confirm the ban on providing cryptocurrency services. It is the latest sign that China is planning to do whatever it takes to plug any remaining holes in cryptocurrency trading.
“The fact that there’s been a crackdown out there probably takes some of its luster off,” said Jeffrey Klintop, senior global investment analyst at Charles Schwab & Co. But it certainly can create some volatility. No one is sure how strict the crackdown will be and China is an important player in the Bitcoin market.”
Some graphic designers are also saying that Bitcoin, which failed to reclaim $40,000 last week, could retest the $30,000 level, which it touched briefly during the brutal sell-off in May. If that happens, he may struggle to find support in the $20,000 range.
Other cryptocurrencies also fell — the Bloomberg Galaxy Crypto Index, which tracks some of the biggest digital currencies, fell nearly 13% at one point on Monday, hitting its lowest point since February.
Bitcoin’s gains this year have narrowed to nearly 11%, in line with the progress the S&P 500 has posted so far in 2021. The coin is on track for its third consecutive monthly loss.
“There is a lot of fear, and when there is fear, people sell risky assets. I think bitcoin is still considered a risky asset,” Meltem Demirors, chief strategy officer at CoinShares, said on Bloomberg’s “QuickTake Stock” livestream. General, investors are volatile.”
CoinShares has seen six weeks of outflows from the company’s publicly traded products. Demirors said investors are turning to stablecoins like Tether, which could push prices higher when there is a positive catalyst for the market.
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