The appearance of the death cross indicator on Bitcoin’s chart has sparked discussions among crypto analysts, including Benjamin Cowen. Cowen emphasized the significance of the $62,000 price level for Bitcoin to avoid another price crash. He highlighted the risk of Bitcoin potentially dropping lower if it fails to hold above $62,000 heading into the Death Cross. Bitcoin’s journey to $62,000 came after it rebounded from a price crash below $50,000 on August 5. However, the rise to $62,000 brought about the ominous Death Cross, which now threatens lower prices for the flagship cryptocurrency.
The death cross indicator is typically viewed as bearish and signals a possible extended period of declining prices for the asset in question. It occurs when the 50-day moving average falls below the 200-day moving average, as Cowen explained. Currently, Bitcoin’s 50-day moving average hovers around $62,000, making it crucial for Bitcoin to reclaim and sustain above this price level. Failure to do so could result in further price declines, with the psychological level of $60,000 already looming on the horizon.
Cowen drew parallels with the Death Cross that occurred in 2019 to shed light on Bitcoin’s potential trajectory. In 2019, the Death Cross marked a local top for Bitcoin, followed by a bearish phase with lower highs for about four months. Despite these observations, Cowen acknowledged that outcomes could vary this time due to different cycle phases. The timing of the Death Cross, coupled with historical trends, indicates a possible downtrend for Bitcoin, with September historically being the worst month for the cryptocurrency.
Cowen emphasized that Bitcoin’s future direction is contingent on external factors rather than just internal market conditions. Macro factors such as inflation rates and labor market trends play a significant role in shaping investor sentiment. The August 5 crypto crash, for instance, was partially attributed to fears of an impending recession, triggered by the US Federal Reserve’s reluctance to cut interest rates to combat rising inflation. Concerns were further fueled by the July US job reports, which revealed higher-than-expected unemployment rates.
Impact of Macro Side on Crypto Market
The macroeconomic landscape has a substantial impact on Bitcoin and the broader crypto market, influencing investor decisions regarding risk assets. As macroeconomic indicators fluctuate, so does investor confidence in cryptocurrencies. The prevailing uncertainties surrounding inflation, interest rates, and labor market conditions can sway market sentiment, thereby affecting Bitcoin’s price movement in the near term.
The reemergence of the Death Cross indicator on Bitcoin’s chart has reignited concerns about potential price declines and market volatility. While historical precedents offer insights into possible outcomes, external factors such as macroeconomic conditions will significantly shape Bitcoin’s trajectory in the coming months. As investors monitor key price levels like $62,000 and observe broader market trends, the interplay between technical indicators and macro influences will continue to steer Bitcoin’s price action.
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