Bitcoin is currently experiencing a significant technical formation on its chart. After a month marked by alternating bullish and bearish trends, recent analyses have indicated that the cryptocurrency is on the verge of a “death cross.” This pattern is particularly concerning following Bitcoin ’s sharp decline earlier this week, where its value plummeted to around $49,781.
The death cross is a technical chart formation that signifies the potential for considerable sell-offs. This occurs when a cryptocurrency’s short-term moving average, commonly the 50-day, crosses below its long-term moving average, often the 200-day. This situation suggests that Bitcoin ’s short-term momentum has weakened compared to its long-term trend. However, it’s important to mention that not every instance of a death cross leads to extended periods of bearish performance. Bitcoin has historically shown resilience, rebounding from previous death crosses, such as the one observed in March 2020, which preceded a significant rally later that year.
As of now, Bitcoin ’s price has seen a slight recovery, trading at approximately $57,200 after reaching a peak of $57,707 earlier. This recent fluctuation has resulted in the asset’s market capitalization shedding over $200 billion in just one day. Interestingly, despite the decline in price, Bitcoin ’s trading volume has surged, climbing from $26.7 billion early Wednesday to over $43.5 billion later.
Analyzing Bitcoin ’s chart further, a well-known cryptocurrency analyst noted the presence of a “classic rising wedge” formation. This pattern suggests that if Bitcoin breaks the support level at $56,800, a downward correction to around $54,500 could be expected. Conversely, if Bitcoin manages to close a trading candle above $58,000, the bearish pattern might be deemed invalid, potentially signaling a stronger upward trend.
