"Death Cross" Risk and $62,000 Resistance in Bitcoin
Bitcoin is likely to experience a “death cross” soon, but whether the $62,000 level turns into support could be a key factor in mitigating potential declines in BTC price. This development caught the attention of Bitcoin investors and caused historical data to be consulted to understand how similar situations have played out in the past.
A death cross refers to the crossing of the short-term moving average below the long-term moving average. Generally, this is considered a technical indicator that the price may fall further.
In the current situation on Bitcoin, the 50-day simple moving average (SMA) is at $61,998 and the 200-day SMA is at $61,882. The intersection of these moving averages can provide investors with clues about the future direction of Bitcoin price.
In an X post on August 9, Benjamin Cowen explained how Bitcoin could be affected by this technical indicator and how the bulls could avoid a new price decline.
Using historical data, Cowen presented several examples of how this type of death cross affects the price of Bitcoin. In particular, he noted that Bitcoin is entering a period of gains after the last death cross in 2023. After the death cross, Bitcoin rose above the 50-day SMA and held it as support, thus making an upward move.
However, historically the effects of such intersections can have mixed results. Cowen emphasized that price movements after the death cross in 2019, 2021 and 2022 mostly resulted in losses. He stated that in these years, Bitcoin faced expected losses after experiencing short-term rises.
Therefore, he emphasized the importance of BTC staying above the 50-day SMA in the current situation and holding it as support.
Cowen suggested that Bitcoin rising above the $62,000 level and holding it as support will determine the permanence of this move. He stated that if BTC cannot hold this level as support, the downward movement of the price may continue, and this may continue without a significant change in macroeconomic conditions. In particular, he noted that the US Federal Reserve should make a sufficient interest rate change to support crypto and risky assets.
Bitcoin/USD has recovered to $62,775 at the time of writing, but it remains unclear whether it can stay above this level. Market observers have observed a lack of recovery in the futures market despite Bitcoin prices rising. This follows a rare giant dump in Bitcoin history.
CryptoQuant contributor Julio Moreno stated that this jump was largely due to the closing of short positions in the futures market. Another contributor, Axel Adler Jr., marked the level above $62,000 as key resistance, while emphasizing that major support still lies below this week’s six-month lows of $50,000.
