JAKARTA - The price of Bitcoin is entering the death cross phase. However, this is nothing to worry about as this would be a good buying opportunity.
Bitcoin price shows an uber-bearish indicator occurs when the 50-day simple moving average dips below the 200-day moving average, indicating a decisive shift in market sentiment from gains to losses.
Bitcoin is currently changing hands at $42,870 on the Bitstamp exchange after dropping below $40,000 on Monday 17 January.
Analysts, however, claim that the scary-sounding death cross tends to be a lagging indicator as it simply reflects the cryptocurrency's past performance.
Quantum Economics founder Mati Greenspan told Bloomberg that nearly all previous deaths ended in buying opportunities based on his analysis.
"Some people say it's bearish, but for Bitcoin, almost any previous death cross or golden cross has proven to be a good buying opportunity," he said, quoted by U.today.
Bitcoin scored a death cross in June just days before the cryptocurrency hit a local bottom of around 28,500 US dollars. The flagship cryptocurrency finally regained momentum in August and finally scored a golden cross in mid-September, meaning that the 50-day SMA has risen above the 200-day SMA.
One, however, should not completely rule out a possible bearish scenario. After Bitcoin scored a death cross in 2018, it was followed by a 55 percent correction in bitcoin price. It took more than a year for the golden cross to appear.
A similar scenario also occurred during the 2014-2015 bear market. Historically, Bitcoin has tended to post steeper losses if the market fails to recover within three months of its death,
Previously, Bitcoin experienced a decline due to the ban in Kazakhstan. In addition, Bitcoin also experienced a decline due to the policy of the Fed. United States investors have reportedly been withdrawing and selling Bitcoin.
As a result of this policy, investors prefer more stable investments such as bonds and deposits. Meanwhile, not only Bitcoin, even stock prices also have an effect on the policy. People believe that the Fed's policies will also affect stock prices.
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