Bitcoin: Bears or Bulls?

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Bears or Bulls? What will Bitcoin do?


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No secret that Bitcoin is not doing very well

We certainly don't have to be secretive about it, Bitcoin seems to be rugging the whole crypto market. We all hoped differently, and we probably imagined it differently. There was no immediate expectation that we would start 2022 with a Bitcoin death cross. A death cross arises from technical analysis, in which average price movements are compared.

This methodology can be applied to cryptocurrencies, but also to other markets such as the stock market and the commodity market. Despite Bitcoin being a relatively new asset, Bitcoin has already made a death cross 8x before. And I wanted to take a look at what happened after the previous death crosses.

For all of you who are not aware of what a death cross is I will try to summarize this as briefly as possible.

What is a Death Cross?

A death cross is a pattern in the chart, indicating downward price action. In fact, the name says it all, it doesn't sound very positive, and most of the time it isn't positive either. Moving Averages (MA) are used to determine a death cross. A death cross is determined using the 50- and 200-day Moving Averages. Usually called, the 50MA and 200MA.

When the 50MA dips through the 200MA, we call it a death cross. So the bias here is downward price action, but this crossing could also be a false indicator. The past has proven that death crosses do not always result in a downward price movement in the short or long term. The opposite of a death cross is a golden cross, which suggests that upward price movements are to be expected.

What is a golden cross?

A golden cross is a crossing of the 50MA and the 200MA, where the 50MA is first below the 200MA, but then moves upwards through the 200MA. This makes the golden cross the opposite of a death cross. Not only because of the trend of the moving averages, but also because of the prejudice about the outcome. With a golden cross, the price is expected to go up. However, as with the death cross, this can also count as a false indicator.

Bitcoin's Death & Golden Crosses

We have been able to see 17 crossings in Bitcoin history. And of those 17 crosses, 9 were death crosses and 8 golden crosses. Are you as curious as I was, what preceded each intersection, and most importantly, what happened after? Then read on quickly. We start in 2011!

You can find this information on Tradingview

From January 2011, the 200MA became visible for the first time, after the Bitcoin price had been on it for the first 200 days. Since the arrival of Bitcoin, the price has risen from $0.05 to over $32 in June 2011. Due to this uptrend, both the 50MA and the 200MA rose. However, since June 2011, Bitcoin's price entered a bear market, causing the 50MA to decline faster than the 200MA.
This resulted in the first death cross, which took place in September 2011. A death cross suggests that the price will continue to fall, which turned out to be the case. What followed was a further drop of 58% to the bottom. After Bitcoin had found a bottom, the price entered an uptrend. The 50MA reacted more heavily to this than the 200MA.

This created the second intersection in a very short time. Both MAs crossed, with the 50MA rocketing through the 200MA. A golden cross, which, however, resulted in a price drop of about 30%. This is completely contrary to what everyone expected at this golden cross. After this decline, the price went sideways for quite some time, before a new upward trend became visible.

After the last death cross in 2012, Bitcoin's price rose by over 20,000%! As a result, both moving averages moved upward and no crossing occurred. However, after the new all-time high of $1,244, the price entered a bearish trend. This resulted in another death cross in April 2014. What followed was a brief 25% decline, which quickly turned back into an uptrend.

This price action was also relatively short-lived, because the moving averages crossed twice in the summer months of 2014. After this death and golden cross, the price dropped more than 70% in six months. This brought the counter to 5 crosses, all 5 showing bearish price action.

After the bull run of 2014, Bitcoin price reached a bottom in 2015. As a result, the 50MA and the 200MA sought each other out again. This was followed by three crossings, in just a few months. Striking at the first intersection is the price action. The first crossing was a golden cross! This leaves everyone suspecting an uptrend. But the course continued what the previous crossings were doing; a decrease that eventually showed more than 40%.

The two crossings after that did exactly what is expected. A death cross where the price made a small drop of only 5%. How ironic that a 5% drop really seemed like a drop back then, and we call 5% a “calm” day in the market today. The third crossing was the second golden cross of 2015. After this golden cross, the bull run of 2016/2017 started.

After more than 2 years, the next death cross came in 2018. And this ushered in the crypto winter. In the last days of March 2018, the 50MA and the 200MA crossed for the ninth time. Although the eighth crossing resulted in a huge increase in the price, the outcome of the ninth crossing turned out to be different.

It is striking that after the death cross in 2018, the price rose by about 45%. This increase turned out to be temporary, as the price was in a bear market throughout 2018. This downward trend ended with capitulation, where the price fell by 50% in one month.

In 2019, the 50MA and the 200MA crossed twice. The first time, the 50MA broke through the 200MA, which is a positive signal. This was confirmed by a price increase of 150% in two months. But as always, What comes up, must come down! And that turned out to be the case. The price entered a downtrend, causing the 50MA to slip through the 200MA.
This death cross resulted in a 25% drop. Striking about both crossings is the price action immediately after the crossing. When the 50MA rises through the 200MA, and thus forms a golden cross, you would expect a rise in the price. This was also the case, but not before the price made a short decline. At the death cross in 2019, this price action was the other way around, where we first saw a brief rise, before the decline set in.

In 2020 there was uncertainty surrounding a Chinese virus and uncertainty also broke out on all financial markets. In the first half of 2020, the 50MA and the 200MA crossed three times. Of these three crossings, one was death cross. The first crossing in February 2020 looked positive, but in the short term nothing could be further from the truth.

The death cross soon followed at the end of March 2020. This was caused by the crash in the market, due to the great uncertainty in the world. This caused the 50MA to fall very quickly, but we did not enter a bear market. After this death cross, the price rose by about 900% in a year. What we saw here was that the market recovered quickly and showed a golden cross two months after the death cross.

The price slowly crept up after the initial uncertainty about the virus was over and the bull run really started in the autumn of 2021. However, as is always the case, the explosive rise in the price of Bitcoin and many altcoins cannot go on forever. And we had to deal with a drop of about 55%. During the decline, as Bitcoin was forming a bottom, the 50MA and the 200MA crossed again.

What followed was a brief drop in the share price, which was quickly followed by an 80% rise. During this rise, the 50MA again rose a lot faster, crossing the 200MA positively. Exactly two months later, Bitcoin hit a new all-time high!

2022's first death cross

After the new all-time high of $69,000, the price fell by more than 40%. And now we have arrived at the first death cross of 2022. It comes at a time when there is a lot of uncertainty! And there are many opinions about what will happen next.

These opinions can be summarized in four statements.

  • Bitcoin is now going to rise to $100,000 (or even much higher).
  • Bitcoin will fall short term, then rise again.
  • Bitcoin will rise short term, and then continue the bear market.
  • Bitcoin will drop further to $30,000, $20,000, $10,000, and so on.

I'm not a financial advisor at all, I'm not a technical analyst, nor am I an expert at reading the cards. But what I do believe is that a bull run cannot end without Bitcoin's parabolic move. And we simply haven't seen it yet. Is this a good thought? I seriously have no idea. In the bull run of 2017, we also had some really big declines where you really thought it was over.

What could the Bitcoin death cross of 2022 mean?

Before this death cross, there have been a total of 8 death crosses in the Bitcoin price. So we have arrived at the ninth death cross. Of the 8 previous death crosses, 7 have seen a drop in price after this crossing. In some cases, however, this decline was short-lived, while there are also past examples that resulted in a very long bear market. The only death cross to see only upward price action was during the 2020 crash.

The outcomes of previous death crosses are very different. Both long bear markets and short falls are common forms of price action after a death cross.

So far, four times the 50MA and the 200MA have crossed three times in a very short period of time. In two of the three cases, the long-term result was a significant price increase. It was then 2 golden crosses and 1 death cross very close to each other.

However, we have had a period once before in Bitcoin history so far where the 50MA and 200MA crossed 3 times in a very short time, resulting in 2 death crosses and 1 golden cross. The time this happened, the result was a longer period of downtrend.

We have now 2 death crosses and 1 golden cross

Now we have arrived at such a point again, three crossings in June 2021, September 2021 and January 2022. Here too we see two death crosses and a golden cross. Based on the previous data, you would say that it is likely that the price will continue to fall. However, keep in mind that this is actually far too little data to do a really good research. The price of Bitcoin simply does not exist long enough to really draw conclusions from this.

This is definitely not financial advice, but just an observation of four previous situations that showed the same technical analysis as now, 3 crossings of the 50MA and the 200MA.

I don't have a crystal ball, and I can't tell what will happen! I wish I could!

Conclusion

The price of Bitcoin has had many crossings of the 50MA and the 200MA in recent years. Until 2022, there were as many golden crosses as death crosses. Not every crossbreeding produced the outcome you would expect based on the crossbreeding in the short or long term. This indicator can therefore not be called watertight.

The year 2022 has also started with a death cross, which in total is the ninth death cross in Bitcoin history. However, this does not mean that we have ended up in a long bear market! So we have seen death crosses before where the price actually went up. The overall sentiment in the market plays a major role, in addition to the fact that we are now dealing with a different type of investors. And we shouldn't shut out world news.

Everything together makes the crypto market, but what is most clear to me of all is that no matter how you look at it, Bitcoin has endured a lot of FUD since its inception, and has already gone much higher than what most critics expected. Whether it will be within 1 year or only in 4 years…

I say, on to the next milestone!


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27 comments
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tl;dr we have no fricking clue and it all depends if people start hurtling explosive at each other in Ukraine for example or if some other unexpected thing happens

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Exactly, we simply don't know what is going to happen. But I had to write a blog anyway. Right?

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Thank you for the analysis! It is an extremely interesting situation, but.. I feel like the takeaway of every analysis is going to be the same - we just have no idea. There are so many outside factors happening in the world, such a largely volatile asset just isn't predictable enough.

!1UP

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Yup, no one knows. All we can keep in mind, is that everyone in crypto is making the markets, and act responsible to that.

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Quite educating, I had the knowledge of death crosses but never knew of its opposite, golden crosses. It's a bit sad that we had to begin the market in 2022 this manner but we can't change that. All we need do is accept what the market brings and as well take the right decisions.

BTC still looks bearish in the near term could be because of the death cross. However, BTC has survived different kinds and levels of dips so, I'm certain BTC will survive this crash. This cannot be the death of BTC as critics opine. A recovery is still in sight and if you zoom out a bit, you'll agree that BTC is still bullish.

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But what is the right decision?

Really no one knows what is going to happen. All I know is that we, everyone in crypto is making the markets.

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IMO, the right decision is using the DCA strategy to buy the dips and then hodl for a long-term. Since, you can't predict hundred percent the outcome of your investment, it's important to go in with an amount you can afford to lose.

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Well, no one can say, as there are too many external factors behind the price moves, SEC, war, economic distress.

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I completely agree with you. No one knows, I only looked back what happened before, and how much sense this technical analyses actually made so far.

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The post and analysis are great, as usual you are doing an over the top post. I was only underlying that we need to see all aspects of the story, as this time it might go different.

Let's hope for the best!

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I know, it really can go both ways. And we can only hope for the best

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Thanks for sharing the account education and history lesson, appreciate it

I have no idea what it does now but the uncertainty in the world has me wondering. Guess the next week or two with war and lockdowns we are in for a ride.

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No one knows, Bitcoin has more often surprised everyone. Good and bad ...

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Interesting read. So what you're saying here is everything is clear as mud. lol Nobody has a clue. While these indicators are important to know about and can be good tools in analyzing what might happen next, there are still a lot of factors that play into the markets. I have no better clue than anyone else about where Bitcoin is heading, but I like the history lesson. :-)

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(Edited)

That's exactly what I'm saying. I have no clue, just like anyone else, the only thing I know is that WE, all crypto people who are investing, are making the market. If no one would sell, there would be no crash. And few big sells can still trigger and crash the market as a whole. Is it a lack of education?

What's going to happen? No one knows, but panic selling in a crash is not going to do any good, that's a sure thing. And practically the only thing to realise a loss on your money. Probably a time to sit on your hands and have patience. If people still believe in Bitcoin, in crypto. It will go up again. Wen? Wish I knew.

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There is just way too much going on that can affect BTC so I don't even know what the price will be. However I believe in the longterm trend for BTC and it shows upwards.

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Interesting analysis. Quite a critical moment BTC is at the moment. No one knows for sure what we will happen. I'm however optimistic for the future and we'll for sure see more better days

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