Bitcoin is once again approaching a death cross—a technical signal that occurs when the 50-day moving average crosses below the 200-day moving average. Historically, this crossover is seen as a bearish sign, often associated with further downside pressure. But the real question this time is: Will it lead to a bear market or mark a local bottom, as it has in the past year?
In 2023, multiple death crosses formed on Bitcoin’s chart. Interestingly, each one coincided with a local bottom, followed by a strong recovery. Traders and analysts began to view the signal less as a harbinger of doom and more as a potential contrarian indicator.
The Ghost of 2022
However, zooming out to 2022 tells a different story. That year, a death cross didn’t just signal weakness—it triggered a full-blown bear market. Bitcoin plunged from over $40,000 to under $20,000 in the following months. It was a painful reminder that not all technical patterns are created equal, especially when macroeconomic conditions are unstable.
This contrast has left the market on edge. With the current cross forming, the big debate is whether we’re looking at another local bottom, or if a deeper correction is looming.
What Traders Should Watch
While a death cross alone isn’t enough to predict market direction, it should prompt traders to stay cautious and watch key support levels. Other indicators like trading volume, RSI, and macroeconomic signals—including interest rates and ETF flows—will play a role in determining what comes next.
If Bitcoin holds above key levels post-cross, it may again prove to be a buying opportunity. But if support fails, it could signal the start of another prolonged downturn.