Yerevan (CoinChapter) – VeChain (VET), supply and logistics blockchain, printed a Death cross bearish indicator, pointing at the token’s potential to log further losses following its massive crash earlier this week.
What is Death Cross?
A Death Cross occurs when the short-term moving average crosses below a long-term moving average. Statistically, this pattern indicates sell-offs in the future. There is enough research to suggest a long-term bearish outcome with significant losses.
In the case of VeChain, the 20-day exponential moving average (EMA-20; dark blue wave on the chart below) crossed below the 50-day simple moving average SMA-50 (red wave). The last occurrence of the death cross on the VET daily chart was in August 2020. The token maintained an overall bearish bias until November when EMA-20 finally crossed back above the MA-50. During the said period, VET lost 34 percent of its value.
EMA-20 dropped down below the MA-50 again on May 20, as traders anticipate an upcoming crypto market crisis. VET value was at $0.122 in the early European session Thursday, after briefly crashing down to $0.04 on Wednesday, amid the total crypto crash.
A rough climate in the VeChain and crypto market
The cryptocurrency market as a whole experienced severe losses during the last trading sessions. The crash was initiated on May 13, when the electric car mogul Tesla backed from its initial decision to accept Bitcoin payments for their cars. The decision caused a riot on social media platforms as well and led to panic sell-offs.
The People’s Bank of China further reinforced the bearish trend on May 19. The central bank ordered financial companies to stop engaging with Bitcoin and similar digital assets. That meant a complete ban on using cryptocurrencies as payment tokens and offering services that concern them.
Despite the news coming as no shock from the conservative Chinese official standpoint on crypto, the decision led to a significant avalanche in prices throughout the market.
Bitcoin briefly dipped down to $30,000 on Wednesday, only to recover to $39,752 on Thursday. Ethereum lost 25 percent overnight on the same day and recovered to $2,705 in the early European session Thursday. Dogecoin followed suit with a 42 percent loss before recovering back to $0.37 on Thursday.
What’s next for VET?
VeChain was no exception as it followed the bearish trend and lost 37 percent overnight on Wednesday. However, China’s crypto ban hit the blockchain company harder than many other coins. The problem is deeper rooted, as some of VeChain’s strategic partners are based in China. The National Research Consulting Center and the Yida China Holdings would possibly be unable to continue the partnership.
Combined with the bearish technical indicator Death Cross, the continuation patterns are not looking very optimistic about the moment of writing. However, the token is holding the $0.100 line as additional support. It bounced off the line in the Thursday session, after the low dip of $0.042. The indicated margin acted as a resistance line in late March, topping the token’s attempts for a bullish break.