Will this time be different? Bitcoin eyes drop to $35K as BTC price paints ‘death cross’
As Bitcoin continues to drop in value, the cryptocurrency’s death cross is painted. Jameson Lopp of Casper says that we’re not out of the woods yet, and many more crashes are on the horizon.
The “bitcoin death cross 2022” is a term used to describe the point in time where the price of bitcoin goes below the previous low. Bitcoin’s price currently sits at $10,000, which means that this event could happen as soon as 2022.
On January 8, Bitcoin (BTC) created a trading pattern that conventional chartists are watching for its capacity to predict future losses.
The 50-day exponential moving average (50-day EMA) of the cryptocurrency dipped below its 200-day exponential moving average (200-day EMA), generating a “death cross.” Bitcoin has been on a roller coaster ride in the past two months, plummeting nearly 40% from its all-time high of $69,000.
BTC/USD price chart on a daily basis. TradingView is the source of this information.
Death has a long history throughout history.
Over the last two years, previous death crosses have had no impact on Bitcoin. A 50-200-day EMA bearish crossing, for example, emerged in March 2020 after the BTC price had plummeted from approximately $9,000 to below $4,000, proving to be trailing rather than predictive.
Furthermore, as seen in the figure below, its presence had minimal impact on Bitcoin’s rise to roughly $29,000 by the end of 2020.
BTC/USD daily price chart with a death cross in March 2020. TradingView is the source of this information.
In July 2021, a death cross occurred on the Bitcoin daily charts that was more lagging and less prophetic than the one seen in March 2020. It did not result in a huge selloff as a result of its occurrence. BTC’s price, on the other hand, essentially stabilized sideways until soaring to $69,000 in November 2021.
Death cross on the BTC/USD daily price chart. TradingView is the source of this information.
However, in both cases, the bearish moving average crosses were followed by favorable news, which may have minimized their influence on the Bitcoin market.
For example, in July 2021, the Bitcoin price recovered largely as a result of rumors that Amazon would begin accepting cryptocurrencies for payments — which later turned out to be false — and as a result of a conference dubbed “The B-Word,” at which Twitter CEO Jack Dorsey, Tesla CEO Elon Musk, and ARK Invest CEO Cathie Wood all spoke highly of Bitcoin.
Similarly, Bitcoin rose dramatically from below $4,000 in March 2020, partly as a result of the US Federal Reserve’s announcement of lax monetary policies in response to the stock market crisis caused by the coronavirus epidemic.
This time, the death cross seems to be harmful.
Bitcoin’s recent slump reflected increased investor fear over the Federal Reserve’s intention to rapidly unwind its loose monetary policies in 2022, which will include a reduction in its $120 billion monthly asset purchase program, as well as three rate rises.
Interest rates are often increasing, making unpredictable investments like Bitcoin less tempting than government bonds, which provide assured returns.
“This is confirmation that bitcoin behaves like a risk asset,” Noelle Acheson, director of market research at cryptocurrency lender Genesis Global Trading, told the Wall Street Journal, adding that short-term investors will be “closest to the exit.”
Bitcoin may go below $30K in September, according to a trader
As a consequence, the general decrease in cash liquidity, together with the death cross formation, might lead to further Bitcoin market selloffs. That is, until the BTC price recovers from its current support level around $40,000, which is represented by the 0.382 Fib line in the chart below.
Daily BTC/USD price chart with Fibonacci retracement levels. TradingView is the source of this information.
However, a break below $40,000 might drive Bitcoin’s price to the next Fib line support under $35,000.
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The “btc price prediction” is a question that has been asked many times. The answer to this question will be different each day, as the Bitcoin value is volatile.