Analyst warns about “cross of death” in Bitcoin, with areas of resistance being rejected, Bitcoin has failed to rebound and bearish sentiment is growing, as evidenced by technical signals.
A death cross is a technical chart pattern that indicates the potential for a big sell or a strengthening downtrend. It appears on a chart when an asset’s short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and the 200-day moving averages.
In a Twitter thread, Rekt Capital, an account with 144,000 followers, wrote that the death cross would occur in mid-June if Bitcoin doesn’t raise its price soon. The bearish pattern could send the BTC down to $18,000 or more, he wrote.
14.
The depth of a BTC correction pre-Death Cross is similar to retrace depth post-Death Cross
2013:
• #BTC drops -73% pre-Death Cross
• BTC drops extra -70% post-Death Cross2017:
• -70% pre-Death Cross
• Extra -65% post-Death Cross2019:
• -53% pre-DC
• -55% post-DC— Rekt Capital (@rektcapital) June 1, 2021
The confirmation
Since its all-time record of $65,000, Bitcoin has already lost 43.5% to current levels, which is nothing out of the ordinary for fix sizes. However, the technical signal could mean that there is much more suffering to come.
The analyst made a comparison with the 2017 bull market and the time it took for the crossing of death to occur:
“When the BTC peaked in 2017, it took 107 days for the Cruz da Morte to occur. That means 3.5 months. And during those 3+ months… Bitcoin has dropped -70% since peaking at $20,000,”
He added that since the cross of death happened in April 2018, Bitcoin experienced an additional -65% correction to the downside as it dropped to $3,200 in December of the same year.
If Bitcoin’s 50-day exponential moving average (EMA; the yellow line) crosses under its 200-day EMA (the blue line), this would constitute a bearish pattern known as the “deadly cross”. This chart shows Bitcoin price action for the year so far, with each candlestick indicating one day.
Rekt Capital indicated that they were still optimistic for the long term and that the Cross of Death did not need to take place.
Still macro bullish but more downside will likely be confirmed when the Death Cross occurs. It hasn’t occurred and doesn’t have to occur if BTC recovers
— Rekt Capital (@rektcapital) June 1, 2021
Bitcoin has been trading in an increasingly narrow range since the May 19 settlement event, so a big move in one direction or the other looks imminent.
Bitcoin on the 3-hour chart, showing trading since May 15th.
Does history repeat itself?
Analysts tried to predict when the death cross would occur:
“If history repeats itself, the BTC could see its Death Cross occur sometime between late July or early September 2021,”
Using previous figures from previous cycles, he suggested that a 55% decline from a death cross appearing at similar levels from the peak would cause prices to plummet to about $18,000.
He added that such a drop would return prices to the 200-week moving average, which has traditionally been a big support and long-term buying zones.
“Which is in line with the 200-week EMA, which tends to offer fantastic opportunities with staggering ROI for BTC investors,”
So far bitcoin was trading at $38.807.65.
