Bitcoin (BTC) formed a trading pattern on January 8th. It is widely monitored by traditional Chartists for their ability to predict further losses.
In particular, the 50-day exponential moving average (50-day EMA) of cryptocurrencies fell below the 200-day exponential moving average (200-day EMA), forming what is called a “desk loss”. This pattern appeared when Bitcoin showed a rough move in the last two months, dropping more than 40% from its all-time high of $ 69,000.
History of the cross of death
For the past two years, previous desk loss has not been important to Bitcoin. For example, the 50-200 day EMA bear crossover in March 2020 appeared after the BTC price fell from about $ 9,000 to less than $ 4,000 and turned out to be behind expectations.
In addition, as shown in the graph below, its outbreak had little effect on preventing Bitcoin from rising to about $ 29,000 by the end of 2020.
Similarly, the July 2021 Bitcoin daily chart showed a later and less predictable death cross, as in March 2020. The outbreak did not lead to a major sale. Instead, BTC prices were simply flattened before rising to $ 69,000 by November 2021.
However, as mentioned earlier, the bearish moving average crossover on both instances was accompanied by some good news that could limit its impact on the Bitcoin market.
For example, the July 2021 Bitcoin price recovery came primarily as a result of rumors that Amazon would begin accepting cryptocurrencies for payment-later turned out to be wrong-and After a meeting called “The B-Word” that saw Twitter, CEO Jack Dorsey, Tesla CEO Elon Musk, and ARK Invest CEO Cathie Wood appreciate Bitcoin.
Similarly, Bitcoin fell below $ 4,000 in March 2020, primarily after the Federal Reserve announced loose monetary policy to contain the aftermath of the coronavirus pandemic-led stock market crash. Recovered sharply from.
This desk loss seems dangerous
Bitcoin’s recent decline is investor concern over the Fed’s decision to aggressively end loose monetary policy, including a $ 120 billion monthly asset purchase program dialback in 2022 followed by three rate hikes. Reflects the rise of.
Rising interest rates usually make holding volatile assets like Bitcoin less attractive than government bonds that offer guaranteed yields.
“This is evidence that Bitcoin acts like a risky asset,” Noel Acheson, head of market insights for cryptocurrency lender Genesis Global Trading, told The Wall Street Journal. He added that it was “closest to the exit.”
Related: Traders warn that Bitcoin could exceed $ 30,000 at September lows
As a result, the overall decline in cash liquidity, coupled with the cross-formation of death, can lead to further sold-outs in the Bitcoin market. However, it is the 0.382 fibrine shown in the graph below, unless the BTC price rebounds from the current support level of about $ 40,000.
Nevertheless, below $ 40,000, there is a risk that Bitcoin’s price will be sent to the next Fib line support near $ 35,000.
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