Bitcoin Price Could Trigger a Bearish Death Cross
The current Bitcoin price is attempting to stay above $25,000 per coin, aiming for a higher low compared to the June 2023 local bottom at $24,775. However, even if it succeeds, a death cross on the daily chart is likely to occur, possibly with tonight’s daily close.
Understanding the Bearish Bitcoin Death Cross
The death cross is a bearish crossover signal that indicates a negative outlook for the cryptocurrency market. It occurs when the 50-day moving average crosses below the 200-day moving average. This signal has proven to be significant for Bitcoin in the past.
Analyzing the Performance of Trend-Following Systems
Trend-following systems, such as using golden crosses to buy and death crosses to sell, have shown mixed results historically. While more than half of the trades were losing trades, the winning trades resulted in an average return on investment of 585%. These systems are effective because they capture the majority of a legitimate trend, outweighing the small losses incurred.
Interpreting the Death Cross Signal
Based on the data, there is a higher probability of a new downtrend forming. However, if Bitcoin can establish a golden cross in the days, weeks, or months following the death cross, it could signal a reliable bottom. Other institution-related Bitcoin charts also suggest that the death cross may not be as significant as it seems.
Hot Take: Is the Bearish Trend About to Intensify?
While the death cross signal is concerning, it is important to consider additional factors before drawing definitive conclusions. Other Bitcoin charts, such as BTC CME Futures and Grayscale Bitcoin Trust, show more bullish price action. Therefore, it is possible that the death cross is a false signal and the bearish trend may not pick up steam just yet.
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