Yerevan (CoinChapter.com) — Bitcoin price crashed below $50,000 for the first in more than a month, raising fears that its supersonic bull run in 2021 is nearing its exhaustion point.
The flagship cryptocurrency fell to an intraday low of $47,997, down almost 7 percent into the Friday session. At its year-to-date high, Bitcoin was changing hands for $64,895. That made its ongoing downside correction even more brutal in the eyes of many, who noted that the cryptocurrency could even extend its breakdown move towards the $41,000-42,500 range.
Death Cross
Technical evidence points at the possibility that the Bitcoin price pursues lower ranges. For instance, the cryptocurrency’s latest dip downwards brought one of its short-term moving averages below one of its long-term moving averages. Analysts call the said phenomenon as Death Cross, which hints at the beginning of a bearish market.
Nevertheless, not all 20-50MA bearish crossovers result in deeper downtrends. For instance, in September 2020, a death cross formation could only correct the Bitcoin price lower by 20 percent. Later, the cryptocurrency rebounded sharply in the wake of supportive fundamentals, including ultra-low central bank interest rates, PayPal’s foray into the cryptocurrency sector, and investments from Wall Street firms.
That proved that technical signals merely attempt to forecast future performances based on past performances. It is even possible now that another corporate, say Twitter, announces that it wants to add Bitcoin to its balance sheets. The cryptocurrency would then easily wipe out death crosses and every other bearish indicator.
But until that happens, it is visible that traders want to secure their profits after Bitcoin’s incredible price rally since March 2020. It was up more than 1,550 percent at one point in time from its 2020 low of $3,858 (data from Coinbase).
Bitcoin Price Targets
More bearish evidence comes from a potential Rising Wedge breakout in play. In retrospect, Rising Wedges are bearish reversal patterns that intend to crash an asset by as much as their maximum height, given the price breaks below their support trendlines.
Bitcoin has ticked all the boxes that qualifies it to be in a Rising Wedge breakout mood. The chart below shows it:
The Rising Wedge target sits near $39,000. Meanwhile, a support bar just above the said level provides another short position target to bears. The range is between $42,000 and $43,658.
Photo by Mael BALLAND on Unsplash
