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The price of Bitcoin for 2023 has been in action and is making history, but it’s not for the right reasons because the Crypto bear market of 2022 is still haunting the price prediction charts. With all the price fluctuations and Bitcoin (BTC) being below $22,000, the Crypto market experts and analysts are sure that Bitcoin can see its 1st ever-weekly Death Cross of 2023. Let’s find out more about Death Cross and five things you should know about Bitcoin.
Before we move forward, let’s have a quick look at Technical Analysis (TA)
Overview of Technical Analysis (TA)
The Crypto market is highly volatile. As such, it is of the utmost essence that we abide by a strict strategy or guide and not just make trades solely based on our instincts. Hence, experts and the average traders turn to Technical Analysis (TA) to help them strategize their moves when investing in the Crypto market.
In simple terms, Technical Analysis (TA) evaluates historical price and volume trends to forecast future asset price movements. This is done by applying mathematical calculations called “technical indicators” to an asset’s historical and current price and volume data to detect and analyze trends.
Traders and investors have recently begun employing Technical Analysis (TA) in the Crypto market to determine when to enter the market for a profitable trade. The words “Golden Cross” and “Death Cross” refer to a technical indicator called the Moving Average (MA). So, before we move forward to learn about Death Cross and Bitcoin, let’s check out Moving Average (MA).
About Moving Average (MA)
The moving average is a common stock indicator in technical analysis that assists in creating a continually updated average price. MAs are typically generated to assess an asset’s trend direction or to pinpoint its support and resistance levels.
The average price of a particular asset over a specified period is what the MA, a technical indicator, refers to. The asset’s trend is shown by the MAs, which can be either bullish (positive, upward) or bearish (negative, downward).
When trading Crypto charts in real-time, MAs offer helpful signals. Additionally, they can be adjusted to 10, 20, 50, 100, or 200-day periods, among others. Such times emphasize market trends and make them identifiable.
For a better understanding of Moving Average, Death Cross, and Golden Cross, click here.
Coming to Death Cross in Bitcoin, the following section explains what’s a Death Cross.
Technical analysts use the term “Death Cross” to describe when a short-term average trendline crosses below a long-term average trendline, signaling a change in price momentum. Again, the 50 and 200-day combination often attracts the most attention. For example, late in June 2021, we saw bitcoin’s 50-day moving average fall below its 200-day moving average.
For analysts keeping an eye on Bitcoin, this was marked as an important and potentially bearish chart formation. While Golden Crosses can often point to upcoming bull movements, a Death Cross, on the other hand, is a little more disruptive, as it has been known to welcome some of the worst bear markets in history.
For a detailed knowledge of Death Cross, click here.
Now let’s see the crucial things you should know about Bitcoin’s 1st ever-weekly Death Cross of 2023.
5 Things to know about Bitcoin’s Death Cross
#1 Bitcoin verifies the “breakdown” of the weekly chart.
Bitcoin’s weekly chart has confirmed a “breakdown,” with the latest weekly close at around $21,800, marking a retracement for BTC/USD after experiencing significant upward price action in January. More attention is now on key support levels holding, including long-term trend lines that were reclaimed as support during the January run-up. The 200-day moving average, still at $20,000, is an important level for bulls to remain in control. A weekly close below $21,839 would confirm the breakdown in BTC/USD, which has now come true.
#2 The “most crucial” CPI print is released.
This week’s macro focus is on the announcement of the Consumer Price Index (CPI) for January 2023, which is expected to show a continued decline in inflation. Analysts dispute the significance of a reshuffling of how CPI is calculated, and the report is being closely watched beyond Crypto circles. A higher-than-expected CPI could negatively impact the Crypto market, which has experienced immediate dumps and recoveries after previous CPI reveals. The CPI’s role in Federal Reserve policy adjustments is also being debated, with the following decision on interest rates due in the third week of March.
#3 The first-ever weekly “Death Cross” causes concern.
Bitcoin is currently caught between two “crosses,” with a “golden cross” on daily timeframes combining with a “Death Cross” on the weekly chart and a one-year Exponential Moving Average (EMA) dropping below its three-year counterpart for the very first time. The latter event occurred in mid-December 2022, and the one-year EMA has declined continuously. The crossover could reframe Bitcoin’s bear market behavior, leading to a harder and more drawn-out depression than before, according to a senior market analyst at Cubic Analytics. In addition, the two-year EMA may also cross below the three-year EMA in the next six months.
#4 Whales are making their moves.
Bitcoin whales have increased their transaction activity as BTC/USD dipped to $21,600 around the weekly close. According to an expert community, whale addresses transacted at their highest rate in three months after the dip. Furthermore, material Indicators showed that new sell liquidity coincided with resistance at the 21-Day Moving Average and the .618 Fib, indicating a potentially adverse impact on short-term upward momentum for BTC.
#5 Hodlers recover their health.
Data from On-chain analytics firm, Glassnode, shows that Long-Term Holders (LTHs) have been accumulating new positions in the past month, with its Hodler Net Position Change metric hitting three-month highs on Feb. 13. Additionally, profitability for LTHs is said to be “recovering” in 2023 according to the Spent Output Profit Ratio (SOPR) metric.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.