Bitcoin is nearing a potential death cross on its daily price chart and should occur in the next week or so. A death cross occurs when the 50-day moving average crosses below the 200-day moving average. The so-called death cross typically results in massive price volatility resulting in either bullish or bearish price momentum for the flagship cryptocurrency.
Bitcoin Price Chart Nearing a Potential Death Cross
For the past few weeks, traders and analysts have been watching a potential death cross forming on the daily BTC/USDT chart since mid-May that should eventually occur by mid-June.
Ever since Bitcoin hit its all-time high at $65,000, the digital asset has failed to maintain its upward momentum and has only reversed back to losing 50% in value in just less than two months.
This has resulted in the 50-day moving average moving close to the 200-day moving average. Should the 50-day MA cross below the 200-day MA then it will form the so-called death cross and could point for trouble ahead for BTC, confirming a bear market.
For instance, previous death crosses have resulted in price declines of 70% in 2018 and 47% in 2019. Similarly, the last time Bitcoin marked a death cross was in March 2020 shortly after the coronavirus pandemic-induced market crash that took the cryptocurrency to as low as $3,000.
Bullish or Bearish Market Outcome
The creator of the popular stock-to-flow model, PlanB has highlighted the possibility of two possible scenarios based on Bitcoin’s historical price performance.
In the first scenario, Bitcoin would mimic the price patterns similar to during 2013 and 2017 where the price of the leading cryptocurrency entered into a long-forming bear market with massive price declines.
Even though most analyst suggests for a similar outcome, PlanB also outlined a second possibility where the cryptocurrency goes towards an upwards momentum.
For instance, during Bitcoin’s bull cycles in 2013 and 2017, the 50-day moving average bounced off the 200-day moving average, eventually taking the cryptocurrency to its highest.
However, for that to happen Bitcoin would need to gain serious value by the end of June, July, or August.
If June close will be $54K (or higher) and July, August also $54K (or higher), then 50DMA will bounce off 200DMA and stay above 200DMA. So a nice short squeeze and V-shaped bounce back to $54K (+69%) would result in then bounce back scenario. pic.twitter.com/nqqgyPM8Ls
— PlanB (@100trillionUSD) June 8, 2021