[ad_1]
Bitcoin (Bitcoin) A trading model was formed on January 8th, which has received widespread attention from traditional chart analysts due to its ability to predict further losses.
Specifically, the 50-day exponential moving average (50-day EMA) of the cryptocurrency fell below its 200-day exponential moving average (200-day EMA), forming a so-called “death cross”. This pattern arises because Bitcoin has experienced a difficult journey in the first two months, falling by more than 40% from its historical high of $69,000.
Death cross history
In the past two years, previous death crosses have been insignificant for Bitcoin.For example, the 50-200-day EMA bearish crossover in March 2020 occurred at BTC price dropped from nearly 9,000 USD to below 4,000 USD, The results proved to lag behind the forecast.
In addition, its emergence did not prevent Bitcoin from rising to around $29,000 by the end of 2020, as shown in the figure below
Similarly, there was a death cross on the Bitcoin daily chart in July 2021. Like March 2020, it has a stronger lag and less predictability. Its occurrence did not lead to a large-scale sell-off.On the contrary, the price of BTC was trading sideways before To $69,000 By November 2021.
However, as mentioned above, the bearish moving average crossover in these two cases is accompanied by good news, which may limit their impact on the Bitcoin market.
For example, the rise in Bitcoin prices in July 2021 was mainly due to rumors that Amazon would start accepting cryptocurrency for payment-which was later proved to be wrong-and after a meeting, it was called “B word“Seeing Twitter CEO Jack Dorsey, Tesla CEO Elon Musk, and Ark Investment CEO Cathy Wood spoke highly of Bitcoin.
Similarly, Bitcoin has rebounded sharply from the level of less than $4,000 in March 2020, mainly after the Fed Announcing loose monetary policy To contain the consequences of the stock market crash caused by the coronavirus pandemic.
This time the death cross looks dangerous
Bitcoin’s latest drop reflects growing investor concerns about the Federal Reserve Decide Actively relax its loose monetary policy, including the cancellation of the $120 billion monthly asset purchase plan in 2022, followed by three interest rate hikes.
Generally, rising interest rates will make holding Volatile assets such as Bitcoin Compared with government bonds that provide guaranteed yields, they are less attractive.
“This proves that Bitcoin is like a risky asset,” Noelle Acheson, head of market insights at cryptocurrency lender Genesis Global Trading, Tell the Wall Street JournalAnd added that short-term holders will be “the ones closest to exiting.”
related: Traders warn that Bitcoin may break the September low of $30,000
Therefore, the overall reduction in cash liquidity, coupled with the formation of a death cross, may trigger further selling in the Bitcoin market. However, unless the BTC price rebounds from the current support level of around $40,000, which is the 0.382 Fib line shown in the chart below.
Nevertheless, a break below $40,000 may cause the price of Bitcoin to fall to the next Fibonacci support level near $35,000.
The views and opinions expressed here only represent the views of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, and you should conduct your own research when making a decision.
[ad_2]
Source link
