Bitcoin's Death Cross: Should You Worry or Wait?
The Signal and Its Implications
Bitcoin's recent "death cross" has sparked worry among investors. This occurs when the 50-day average price drops below the 200-day average price. It's a signal that often makes people nervous. But, looking back at history, this signal hasn't always meant bad news.
Historical Performance
- Median return six months after a death cross: ~30%
- Median return twelve months after a death cross: ~89%
Market Context Matters
The bigger picture matters more than the signal itself. For example:
- 2011, 2015, 2020, 2023: Death cross appeared near the bottom of the market, followed by a surge.
- 2014, 2018, 2022: Death cross showed up before the selling was done.
The 2024 "Post-ETF Regime"
The most recent death cross happened in 2024, in what's called the "post-ETF regime." During this time:
- Six-month price increase: ~58%
- Twelve-month price increase: ~94%
This was different from earlier cycles because ETF-related demand and institutional flows played a bigger role.
Current Market Conditions
- Bitcoin's price has already dropped by more than 30%.
- The death cross is happening after this drop, not before.
- The distance between the price and the short-term averages is no longer widening, suggesting the downside might be exhausted.
Potential Buying Opportunities
If selling resumes, the next area where buyers are likely to respond is near $75,000 to $77,000. This is where:
- Prior demand
- Untested liquidity
align. The bias would improve if Bitcoin breaks and holds above the descending trendline and reclaims the $92,000 to $95,000 region.
