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- Insights
- Cryptocurrencies
- Stocks
- White Papers
- Industry
- Geography
Nobody thought that 2022 might be a haunting year for the cryptocurrency market. With massive growth and multiple record highs, 2021 was an eventful year in the history of virtual assets. Although the past year ended on a downward trend, investors thought the market will recover once the new year begins. But 2022 seems to have disappointed the cryptocurrency enthusiasts highly. As a result, Bitcoin is approaching a dreadful pattern known as the 'death cross' after experiencing a massive slump in recent months. Besides affecting BTC investors, the Bitcoin death cross will determine the fate of other digital tokens as well.
Bitcoin's price touched a record high of US$68,500 in October 2021 when Bitcoin ETF made its debut in the NYSE. Since then, the digital token's value has been in constant fall, marking the longest losing streak since August 2019 and the worst start to a year since 2012. BTC's price also stayed below its psychological resistance level of US$40,000 briefly on Monday, putting the investors in a panic. Although the price has recovered, the Bitcoin death cross seems to be approaching rapidly. 'Death cross' generally refers to the scenario when Bitcoin's 50-day moving average crosses its 200-day moving average, which indicates the end of the bull run. The biggest challenge of Bitcoin right now is to hold above the US$40,000 mark to keep away from the looming death cross symptoms. The subsequent price fall took place after Fed has raised the borrowing cost by at least four times.
The constant fall in BTC's price has also put the investors on their heels. Recently, the cryptocurrency market as a whole also lost a lot of value. According to Coinglass, more than US$340 million worth of cryptocurrency has been liquidated in the past weeks. Besides taking a toll on BTC investors, the Bitcoin death cross is also affecting Ethereum, Binance Coin, and Solana's price.
Already experts say that the Bitcoin death cross is fast approaching. This could eventually alert investors and introduce a sell-off season. Whenever a sell-off season took place, BTC's value plummeted to record lows in a considerably short span. On May 30, 2021, Bitcoin's price fell from US$36,500 to US$28,000 in 24 days. The scenario was even worse in March 2020 when the digital token's value dropped from US$8,000 to US$4,000 in just a day.
As a result of the Federal Reserve taking serious actions on inflation, Bitcoin has ended up in trouble. BTC has lost nearly 40% in the few months since it reached a record high in October. Although the cryptocurrency found a resistance neat US$50,000, it couldn't hold its value for a long time.
Death cross generally indicates a decline in the market prices that may or may not indicate further downturns. The global financial market has come across multiple many death crosses in the past in 1929, 1938, 1974, and 2008. But for the Bitcoin market, this is the first time that a death cross seems clearly visible. Although there were a few indications of Bitcoin death cross in March 2020 and June 2021, the market recovered before it could hit rock bottom.
Bitcoin investors can be divided into two kinds. One is long-term investors and the other is short-term investors. For long-term investors who use the effective buy-and-hold strategy to make a profit, these price falls might seem to be simple. On the other hand, short-term investors might be at the edge right now since they might've invested in BTC when a token was sold at US$60,000, and losing US$20,000 per token might be a stressful thing. We also have investors who use Bitcoin as a transaction medium. For them also, the death cross might be tormenting.
