Bitcoin forms a ‘cross of death’ while its sell-off shows no signs of pardon – El Financiero

After a lot of news related to China’s renewed crackdown triggered a Bitcoin sell-off, charts and analysts are turning to a sinister-sounding technical signal.

The original cryptocurrency has formed a death cross, meaning that its average price over the past 50 days fell below that of its 200-day moving average.

The indicator is usually seen as a closely monitored technical measure that could offer a clue to more pain to come.

Many analysts had anticipated that the currency, in the midst of a recent recession that has seen it lose 40 percent in the past two months, would form the gloomy-sounding pattern.

But there’s reason to believe the formation this time might not be such a bearish signal given that the 200-day moving average continues to rise, according to Matt Maley, chief market strategist at Miller Tabak+. “When it starts to slow down, that will be more compelling,” he said.

In fact, Bitcoin’s mark of a death cross in March 2020 did not prove to be an impediment to profits, as it rose and formed a golden cross (when the pattern is reversed) two months later. But a death cross in November 2019 caused the currency to trade lower a month later.

Bitcoin fell on Monday to a two-week low, falling as much as 11.4 percent at one point to $31,735, after China announced it summoned officials from its largest banks to a meeting to reiterate the ban on providing cryptocurrency services. It’s the latest sign that China plans to do whatever it takes to close the remaining loopholes in the crypto trade.

“The fact that there’s a crackdown there maybe takes some of the shine off it,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co. “I’m not sure it’s a sign of a long-term change of direction, but it can certainly create some volatility. No one is sure of the extent of the crackdown and China is a major player in the Bitcoin market.”

Some chartists also say that Bitcoin, which failed to recover $40,000 last week, could retest the $30,000 level, which it touched briefly during its brutal May sell-off. If that were to happen, it might have a hard time finding support in the $20 thousand range.

Other cryptocurrencies also retreated: The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital currencies, fell about 13 percent at one point on Monday, marking its lowest point since February.

Bitcoin’s earnings this year have shrunk to about 11 percent, in line with the advance released by the S&P 500 so far in 2021. The coin is on track for a third consecutive monthly loss.

“There’s a lot of fear, and when there’s fear, people sell risky assets. I think Bitcoin is still perceived as a risky asset,” Meltem Demirors, chief strategy officer at CoinShares, said on Bloomberg’s “QuickTake Stock” streaming program. Generally, investors are scared.”

CoinShares has experienced six weeks of exits from the company’s publicly traded products. Demirors said investors are moving towards stablecoins like Tether, which could drive up prices when there is a positive market catalyst.

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