Analyst’s prediction about Bitcoin approaching the technical chart known as the "death cross," which indicates a dramatic drop to $18,000.
Bitcoin's price has been a true roller coaster for several weeks, with quick increases, dizzying crashes, and surprising turns. The cryptocurrency's price was ready to form the "death cross," a graph that could predict a significant decline in its value.
A death cross is a technical chart pattern that indicates the possibility of a large sell-off or an intensifying slump. When an asset's short-term moving average falls below its long-term moving average, it appears on a chart. The 50-day and 200-day moving averages are two of the most commonly used moving averages in this pattern.
According to the analyst, there is a significant lag before a death cross happens, and much of the selling might already have occurred.
Bitcoin has already dropped 43.5 % of its all-time high of $65K to current levels, which is not unusual for correction magnitude. The gloomy technical signal, on the other hand, could indicate that there will be a lot more agony ahead.
The expert made a parallel between the 2017 bull market and the duration of time it took for the death cross to occur:
“When BTC was at its maximum in 2017, the Death Cross took 107 days to occur. That equates to 3.5 months. And during those three and a half months... Bitcoin has lost -70 percent from its top of $20,000,”
He went on to say that after the death of the cross in April 2018, Bitcoin saw a further -65% drop to the downside, falling to $3,200 in December of the same year.
The death cross appeared 149 days after the peak of the mini-rally in mid-2019. BTC prices had dropped by 53% by this point, but a further 55% drop occurred following the cross.
The analysts attempted to forecast when the death cross would occur:
“If history repeats itself, BTC's Death Cross might occur between late July and early September 2021,”
Using previous cycle data, he predicted that a 55 percent drop from a death cross emerging at roughly the same levels as the peak would send prices plunging to around $18,000.
He said that a drop of this magnitude would bring prices to the 200-week moving average, which has historically served as a strong support and long-term buy zone.
“Which corresponds to the 200-Week EMA, which tends to present amazing opportunities with outsized ROI for BTC investors,” says the author.