Bitcoin is considered by many to be a safe haven in case an economic recession begins. With recent news on the US-China trade deal being presented as negative, the possibility of an economic recession increases — and, with it, so does Bitcoin’s potential.
Furthermore, even though Bakkt has had a sluggish start, the volume has recently picked up. On October 23, the daily volume reached an all-time high of $4.8 million, Similarly, the number of contracts traded also reached an all-time high. This is a clear sign of increasing institutional interest in the cryptocurrency.
However, while the flurry of positive news might indicate that the Bitcoin price is bound to increase, technical indicators paint a gloomier picture.
Cryptocurrency trader @murocrypto stated that a death cross is incoming on the daily time-frame.
Upcoming death cross on the daily and recent price action with the last SFP indicated this drop pretty well.
Congrats to all shorters.
Watching a possible bounce here at 7200-7300 range pic.twitter.com/ZX9mX5h0PJ
— MUROCRYPTO (@MuroCrypto) October 23, 2019
What is a death cross? What does it indicate? How did the price react the last time a death cross occurred? Continue reading below if you are interested in finding out.
Current Bitcoin Death Cross
A death cross is a bearish cross between the 50- and 200-day moving averages (MA).
A cross of these specific short- and long-term MAs indicates that the previous upward move has lost its strength and the trend has begun to turn downward.
Currently, the gap between the MAs is less than $100 — making it almost certain that the cross will be confirmed today.
The previous time a death cross occurred was in April 2018.
Interestingly, this was followed by a month long uptrend in which the price reached a high of $10,000.
However, what succeeded was an eight-month downward trend.
Therefore, the death cross successfully predicted the ensuing downtrend.
Previous Death Cross
Before this, however, a death cross transpired in September 2015.
What followed was an uptrend which lasted for more than two years, until the high of December 2017.
The bearish cross did not last long since the MAs made a bullish cross in October of the same year.
We suggested that the price might be in a similar phase of the correction in yesterday’s article. Therefore, we believe the price is more likely to do a movement similar to the one in 2016 than the one in 2018.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images are courtesy of Shutterstock, TradingView.
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