Key facts: The death cross is often considered to be the confirmation of a bearish trend. No technical indicator, on its own, can be considered infallible. One of the most feared patterns (at least, by name) in technical analysis has formed on the bitcoin (BTC) price chart. It is the death cross.
This is the name given to the crossing of a short-term moving average (generally 50 periods) below a long-term moving average (generally 200 periods). Now, the death cross has been formed If you analyze the price of bitcoin with daily candles, as can be seen in the following TradingView chart:
The price of bitcoin formed a death cross. Source: TradingView. The death cross is often considered the Confirmation of a bearish trendIn technical analysis, moving averages are used to smooth out price fluctuations and to identify trends over time. When a short-term moving average crosses below a long-term moving average, it is a signal that bullish momentum has weakened and sellers are taking control, which could lead to an extended decline in price. This pattern suggests that market sentiment has shifted towards greater pessimism, as market participants expect the price to continue to fall. However, it is important to clarify that the death cross (like all technical analysis patterns) It is not an infallible indicator. While it has historically preceded significant declines, there have also been times when the price of bitcoin has bounced higher shortly after this pattern formed. Therefore, it is essential to combine this indicator with others, as well as fundamental analysis, to get a more complete and accurate view of the market. According to analyst Augustine Fan, head of analysis at SOFA.org, The downtrend could last a few more days. “Cryptocurrency prices will probably remain within a range with a bias towards the weak side,” the specialist said in statements to the press. He bases his conclusion on different technical analysis models. Something that may be influencing this behavior is the worsening of the war conflict in the Middle EastYesterday, Iran threatened Israel with an air strike that could last for several days.
Tensions are rising in the Middle East. Source: stock.adobe.com In situations of uncertainty, investors usually prefer to be positioned in assets considered to be more «safe» such as gold, Treasury bonds and cash. That is why volatile markets such as stocks and cryptocurrencies are usually affected. We will have to wait for the next few hours and days to see how this situation develops. In any case, in the medium and long term, expectations continue to be mostly bullish for bitcoin. Grayscale, for example, expects the price of BTC to mark a new historical highs before 2025.