Bitcoin is approaching the “Cross of Death” after experiencing a massive slump in recent months
No one thought that 2022 could be an unforgettable year for the crypto market. With huge growth and record highs, 2021 was a turbulent year in the history of virtual assets. Investors believed the market would recover when the New Year began, although it ended on a downtrend last year. However, 2022 seems to have been very disappointing for crypto enthusiasts. As a result, Bitcoin is approaching a horrifying pattern known as “desk loss” after experiencing a major downturn in recent months. In addition to influencing BTC investors, Bitcoin’s desk loss also determines the fate of other digital tokens.
In October 2021, when the Bitcoin ETF debuted on the New York Stock Exchange, Bitcoin’s price reached a record high of US $ 68,500. Since then, the value of digital tokens has been declining constantly, marking the longest loss streak since August 2019 and the worst start since 2012. BTC’s price also temporarily fell below the psychological resistance level of $ 40,000 on Monday, panicking investors. Prices have recovered, but Bitcoin’s desk loss seems to be approaching rapidly. “Desk loss” generally refers to the scenario where the 50-day moving average of Bitcoin intersects the 200-day moving average. This marks the end of Bull Run. The biggest challenge for Bitcoin today is to maintain levels above US $ 40,000 to avoid the oncoming cross-symptoms of death. Subsequent price cuts came after the Fed raised borrowing costs by at least four times.
The constant decline in BTC prices is also hunting down investors. Recently, the entire cryptocurrency market has also lost a lot of value. According to Coinglass, over US $ 340 million of cryptocurrencies have been liquidated in the last few weeks. In addition to damaging BTC investors, Bitcoin’s desk loss is also affecting the prices of Ethereum, Binancecoin and Solana.
Why is Bitcoin in a serious situation?
Experts already say that Bitcoin’s desk loss is rapidly approaching. This will eventually warn investors and may introduce a sold-out season. With each sold-out season, the value of BTC plummeted, hitting a low in a fairly short period of time. On May 30, 2021, the price of Bitcoin fell from $ 36,500 to $ 28,000 in 24 days. The scenario was exacerbated in March 2020 when the value of digital tokens dropped from $ 8,000 to $ 4,000 in just one day.
Bitcoin has become a problem as a result of the Federal Reserve’s serious action against inflation. BTC has lost nearly 40% in a few months since it hit a record high in October. Cryptocurrencies have found resistance of $ 50,000, but have not been able to retain its value for long periods of time.
Why are you scared of desk loss?
Desk loss generally indicates a decline in market prices, which may or may not indicate a further decline. The world’s financial markets have encountered multiple death crosses in the past in 1929, 1938, 1974 and 2008. But for the Bitcoin market, this is the first time that the cross of death is clearly visible. There were some signs of Bitcoin’s death cross in March 2020 and June 2021, but the market recovered before it bottomed out.
How should investors react at this point?
Bitcoin investors can be divided into two types. One is a long-term investor and the other is a short-term investor. For long-term investors who make a profit using an effective buy-and-hold strategy, these price cuts may seem simple. On the other hand, short-term investors may have invested in BTC when tokens were sold for $ 60,000, and losing $ 20,000 per token can be stressful, so they may be at the edge now. I have. Some investors also use Bitcoin as a trading medium. For them too, the cross of death can be painful.
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