Key Points
- Bitcoin is nearing a ‘death cross’, a bearish trading indicator, but past trends suggest a recovery is possible.
- Despite a recent rebound, Bitcoin’s price is still down around 22.2% from its all-time high in March.
Bitcoin is inching closer to a ‘death cross’, a phenomenon in trading where the 50-day moving average falls below the 200-day moving average, usually a bearish sign.
Historically, Bitcoin has faced similar patterns. In March 2020 and June 2021, a death cross was followed by a significant rally to record levels.
Death Cross Looms Over Bitcoin
Bitcoin’s short-term gains have not been sustained above its long-term gains, leading to the emergence of this pattern.
However, if past trends hold true, Bitcoin might be on the brink of an upside breakout.
A prominent crypto enthusiast known as ‘walltreetbets’ has pointed out a pattern in Bitcoin’s chart that mirrors the one seen in 2020, when Bitcoin rebounded sharply from below $5,000 to over $20,000 after a similar pattern.
According to Wallstreetbets, the 2024 chart suggests a similar trend.
Fundamental Outlook
Looking beyond technical analysis, Bitcoin’s fundamentals also offer insight into its potential future direction.
Bitcoin’s Market Value to Realized Value (MVRV) ratio, which measures the discrepancy between market price and actual value, was 1.79 at press time, suggesting that Bitcoin was undervalued.
In addition, Bitcoin’s Open Interest, representing the total number of outstanding derivative contracts yet to be settled, rose by 3.81% in the past 24 hours to $28.24 billion.
However, the Open Interest volume saw a significant decline of 48%, standing at $80.12 Billion at press time, indicating a shift in trader sentiment or a cooling off in market momentum.
