Jaipur (CoinChapter) — Another round of price correction is awaiting Bitcoin (BTC), technical charts show. Will it lead to the beginning of another long bear market? Let’s see.
Bitcoin 50 MA Crosses Under 200 MA
If the daily technical setup for Bitcoin is to be believed, the benchmark cryptocurrency is headed for a death cross in a few days.
Actually, it could happen this month, to be precise. For any asset, a death cross results in a ‘bearish crossover,’ a scenario where the 200-day moving average (MA) crosses and moves over the 50-day MA. This can also be translated as the 50-day MA ‘closing below the 200-day MA.
Noted traders and technical analysts like Michael van de Poppe (based in Amsterdam) also have similar thoughts. “Death cross will happen on #Bitcoin. Deal with it.”, he observed in a tweet yesterday.
BTC has been majorly trading sideways after dropping more than 50% from its all-time high (ATH) in the last bullish rally. Buyers attempted to push past the $41,000 resistance based on bullish news this week. But, unfortunately, sellers crowded in to cash out and make quick profits off the nascent rally.
The BTC/USD pair is trading well below the 50-day MA and 200-day MA, with the former risking going down under the latter. Historically this has resulted in severe drawdowns in Bitcoin prices.
Currently, the BTC market is well supported by the $30,000 and $31,000 price levels. But in the event of a correction, they could get retested again. In fact, in the absence of significant buying pressure, bears could push Bitcoin down to new support.
Not All That Gloomy
While Bitcoin price gives bearish vibes due to news surrounding the Federal Reserve’s planned interest hike in 2023, it will help to read it a bit differently.
Mr. Van de Poppe’s perspective on the same could bring some much-needed clarity. While he apprised followers about the potential death cross, he also criticized the inability of investors/traders to stomach bearishness.
Currently, #Bitcoin is down 40% from the recent high at $63,000. But, it’s up 1,100% since the March low. Yet, the sentiment is like a funeral, and people only compare to their last ATH.
He said in a tweet. Expressing his whole-hearted bullishness, Michael shared the below chart and expected the same price action to play out shortly.
The Fed-induced bearish stance may be transitory as the central bank won’t make a move much until the latter half of 2023. Till then, the BTC/USD pair could very well be in a position to follow the path that Poppe mentioned above.
In general, Bitcoin and the cryptocurrency market also stand to gain from the “compulsory portfolio allocation to crypto” sentiment amongst hedge funds.