The word “death cross” has been an area of concern both in the traditional stock or crypto market. But what does death cross means? According to Investopedia, this occurs when there is a decline of a short-term moving average- this pertains to the average of recent closing prices for a stock, stock index, commodity, or cryptocurrency over a specific period of time —below a longer-term moving average. This usually appears with the moving averages of 50-day and 200-day.
The death cross has been a reliable indicator in predicting some of the market crashes. Although the word sounds dreadful, it only means that the price action was fallen over a period of time. And in market history, it is often followed by a rebound with above-average returns.
Bitcoin death cross has happened eight times in its 12 years of trading history. The BTC (Bitcoin) first death cross happened on September 28, 2011, after surging to $30 in Mt. Gox, a Japanese exchange. Trading at $11 at that time, its price tremendously dropped to only $4 and lost more than 60% of its value. Between 2012 to 2013, a total of 3 Bitcoin “death cross” occurred after a price rally. From 2014 to 2015, another 3 “death cross” with varied aftermath. While the two resulted in the spike of BTC (bitcoin), the other was followed by a deep correction.
The 2017 bull run with the most dominant digital asset recording an all-time high at $19,783.06 was followed by a death cross in March 2018. BTC (bitcoin) dropped to as low as $6,848.01 suffering from a 65% decline but has later surged to $9,950. After nine months, its price recorded a new low at $3,128.89 in December 2018 dropping by more than 50%.
For 2019 and 2020, there was two recorded Bitcoin death cross. On October 25, 2019, BTC (bitcoin) price dropped to $6,500 but has bounced back shortly and rallied to 40% after its price surpassed $10,000. The COVID 19 pandemic in 2020 resulted in yet another death cross in March 2020. The digital asset’s price declined to only $5,000 but it marked the year when BTC (bitcoin) rose by 300% in value outperforming gold. At the end of 2020, BTC (bitcoin) has recorded its newest all-time high breaking its 2017 record with its price at $25,000. And before the year ended, it recorded a new peak with its price at $29,374.
Despite having a good start, the crackdown by the Chinese government on all crypto-related activities including bitcoin mining has made a huge impact on BTC (bitcoin). After recording an all-time high at $64,800 in April 2021, while still undergoing a price correction, BTC (bitcoin) price fell by 18% in June 2021. But prices rebounded and have recorded all-time highs one after another as a result of a continued price rally. In October 2021, BTC (bitcoin) price hit the $64K mark. In November 2021, it surpassed the $68K mark with its price at $68,978.
With an impending ‘death cross” that threatens Bitcoin and the whole crypto market, should investors need to worry? As early as January, analysts are already on the watch for another “death cross”. But as we look at the history of the previous Bitcoin death cross, we can see a variation in its result. Although a death cross could lead to sell-offs, not all have caused a massive market crash. With bulls taking over, in some instances, the market has rebounded so fast as if the death cross never happened.