- The Bitcoin death cross formed on June 19, 2021.
- The pattern is a bullish indicator that often leads to massive sell-offs.
- However, the indicator does not always hold true.
The dreaded Bitcoin death cross has finally formed with the MA-50 line crossing the MA-200 line yesterday, June 19. Although the pattern typically indicates an upcoming bear market, here are a few reasons not to worry.
The death cross is typically a lagging indicator that shows what has mostly happened in the market already. As such, the market tends to bottom out before the indicator and not after it. In fact, the cross intersection is usually the best time to exit the market for those fearing the worst.
Previously, the death cross indicator has been reliable in both crypto and stock markets. For instance, the Q4 2019 and Q1 2020 Bitcoin crashes were preceded by a death cross.
The ultimate thread on #BTC deathcross and cycle data analysis
1) Historical #deathcross until #goldencross time (in days) + largest price swing since deathcross begins:
2011: 180 D, -59%
2014: 90 D, +83%
2014: 390 D, -63%
2018: 360 D, -55%
2019: 105 D, -29%
2020: 50 D, +66% pic.twitter.com/8JmbtnFLGJ
— venturefoundΞr (@venturefounder) June 17, 2021
However, several crypto experts have advised that the best thing to do at this point is to hodl. This is partly because the crypto market is still relatively young and as such indicators do not always hold true. For example, in 2015 Bitcoin death cross preceded a major bull run.
Specifically, if the MA-50 manages to flip causing a golden cross within the next 3 months. The resulting reversal could lead to a major bull run.
This is because when a bull run ends the short-term momentum shown by the 50-day moving average (MA) starts to slow down. The decline causes the 50 MA line to intersect with the 200 MA line. However, if the MA-50 picks up again the two lines will once again intersect forming a golden cross.
Based on past trends, if the death cross is followed by a golden cross within 3 months this could lead to a massive price surge. However, if the death cross does not reverse it will likely lead to a downward trend and bear season.
Also, in the past post-death-cross price bottoms have proved a profitable entry point. Thus, in the event that the market bottoms out post-death cross, it might be worth buying the dip. However, if investors remain skeptical, it is advisable to keep holding your BTC until the market recovers.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.