Death Cross For Bitcoin (BTC) Is Here Which Indicates A Big Sell-Off
After weeks of speculation, the MA-50 line was observed to have crossed below that of the MA-200, which means that Bitcoin (BTC) has now officially experienced a death cross in 2021. This is typically indicative of a major potential sell-off, but for Bitcoin, there might be several reasons as to why we need not be too worried.
The biggest reason is that death crosses have occurred before, and Bitcoin had managed to recover afterwards. 2019’s last quarter and 2020’ first quarter both experienced crashes which were then followed by the aforementioned death cross. Whenever a death cross does take place, it often implies that the market is about to undergo a seismic shift.
Death Cross
A death cross indicator is not exclusive to the crypto industry either, as both the crypto as well as the stock markets often consider it to be a reliable tool. It has existed for a long time, too, with the indicator managing to accurately predict four major cryptocurrency crashes in the past, including both the 2008 and 1974 stock market crashes as well.
Simply put, whenever any bull market does come to an end, shot-term momentum is often observed to gradually slow down. This momentum is signified by the 50MA, also known as the moving average line for 50 days.
Reliability
What really sets the crypto market apart from the more traditional markets is the fact that it is still relatively younger than most. Moreover, it experiences abnormal levels of volatility and does not always operate by the same rules as other markets. This is because death crosses have often dealt critical blows to broad-based indices and individual stocks in the past, but cryptocurrencies nearly always seem to miraculously recover afterwards.
Of course, the abovementioned indicator is not exactly foolproof. The BTC death cross experienced in the middle of 2015, for instance, had occurred on a relatively much smaller volume. What is interesting about this specific example is that there had been a huge bullish run after the 2015 death cross had happened, which many experts were seemingly baffled by at the time.
Ultimately, death cross indicators should definitely be considered, but we should also remember that cryptocurrencies function differently than most. This may be a result of Bitcoin still being a comparatively much younger digital asset, but whatever the case may be, caution must nevertheless be exercised whenever a death cross occurs.
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