Bitcoin has experienced a noticeable rebound following its negative performance on the “Red Monday” witnessed this week. However, according to prominent crypto analyst Benjamin Cowen, the asset now finds itself at a critical juncture.
Cowen revealed in a series of posts on X that Bitcoin is facing what traders term a “death cross”—a technical chart pattern that could signal either a potential recovery or further losses. The asset’s fate hinges on a crucial key price point of $62,000. This level is vital for Bitcoin to convert its current resistance into support to fend off the bearish implications of the death cross.
In technical terms, a death cross occurs when the 50-day simple moving average (SMA) falls below the 200-day SMA, a pattern traditionally seen as a predictor of possible price declines. While the pattern’s outcome isn’t always straightforward or immediately bearish, historical data shows mixed results, making the current formation significant.
Cowen noted that Bitcoin’s reaction to the death cross has varied over the years. For example, following a death cross in 2023, Bitcoin sidestepped further declines and rallied, breaking above its 50-day SMA and using it as support for subsequent gains. This pattern was echoed in previous years like 2019, 2021, and 2022, when Bitcoin initially rose post-death cross but eventually succumbed to bearish pressures.
To replicate the positive outcome seen in 2023, Cowen suggested that Bitcoin must first rise above the $62,000 mark and maintain it as support. The durability of this move will likely depend on Bitcoin’s ability to surpass its 50-day SMA and hold it as support, similar to its performance in 2023. If it fails to maintain this support, a slow downward grind is expected until there’s a significant pivot from the U.S. Federal Reserve.
Currently, there is no immediate catalyst that might support Bitcoin in making the initial rise and flipping its resistance. The sustainability of such a rally might heavily rely on broader economic conditions, particularly the monetary policies of the United States Federal Reserve. A pivot in interest rate policies could be a decisive factor for Bitcoin and other risk assets to make a significant move, either upwards or downwards.
Featured image created with DALL-E, Chart from TradingView.
