The 50-day and 200-day moving averages of Bitcoin are progressively convergent, as the chart illustrates, which raises questions about the asset’s potential price movements. Because it typically indicates impending downward pressure, a death cross frequently causes traders to exercise increased caution. This pattern indicates that Bitcoin may be about to enter a prolonged bear market.
Nevertheless, it is important to consider the larger market environment because death crosses do not always result in appreciable price drops. As of right now, the price of Bitcoin is hovering around $56,000. In the near future, it will be important to monitor a few key price levels.
To prevent additional losses, the asset needs to maintain the $58,000 support level as the first target. This is the next major support level, and if BTC breaks below it, it will find stability again at $54,000. For a more bullish trajectory to continue, Bitcoin must rise above the resistance at $60,000.
On-chain data also points to conflicting signals. On-chain metrics like net network growth and large transactions remain neutral, indicating that there is not a clear trend in Bitcoin’s current state. In contrast, exchange signals are primarily neutral to bullish. The fact that investors are not currently making a strong investment in the asset, as indicated by the exchange’s negative netflows, may indicate that the market is feeling cautious.
With neutral on-chain data and the potential for a death cross, Bitcoin’s immediate price action is unpredictable. Although there may be a short-term downside risk associated with the death cross, Bitcoin has a history of resilience and has recovered from similar circumstances in the past.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
