Crypto analyst Benjamin Cowen has recently highlighted the significance of the death cross indicator, a technical signal that has resurfaced on Bitcoin’s chart. This marker has made the $62,000 price level critical for Bitcoin to avoid another significant price dip.
In a video posted on his YouTube channel, Cowen warned that Bitcoin faces the risk of plummeting further if it fails to maintain a price above $62,000 as it approaches the Death Cross. Bitcoin had witnessed a recovery surge, reaching as high as $62,000 after previously crashing below $50,000 on August 5. However, this boost has also ushered in the Death Cross, which now looms over Bitcoin’s price trajectory.
The death cross indicator is traditionally seen as a bearish signal, often heralding a prolonged period of price declines for an asset. This particular death cross manifests when the 50-day moving average falls below the 200-day moving average. According to Cowen, Bitcoin’s 50-day moving average currently hovers around $62,000.
Therefore, it is imperative for Bitcoin to regain and sustain a level above $62,000 promptly. Failure to do so could lead to further declines, with the psychological barrier of $60,000 already within potential reach. Cowen compared this situation to the Death Cross event in 2019, which marked a peak for Bitcoin, followed by a period of lower highs and a bearish trend that lasted about four months. Nevertheless, he acknowledged that the outcome could be different this time, as such indicators often manifest uniquely in different market cycle phases.
The timing of this Death Cross also offers clues on Bitcoin’s future. Cowen pointed out that September is historically the worst month for Bitcoin. This historical trend suggests that Bitcoin might experience a downtrend extending into September.
Beyond the technical indicators, Cowen emphasized that Bitcoin’s future will largely depend on macroeconomic factors rather than the current conditions within the crypto market. These factors include inflation and the state of the labor market. The macroeconomic environment was a significant trigger for the crypto crash on August 5, driven by escalating fears of a recession.
The US Federal Reserve has refrained from cutting interest rates in an effort to bring inflation down to its target of 2%. This reluctance, however, has spurred projections that the US economy might soon face a recession. The July US job reports indicated a higher-than-expected unemployment rate, adding to market anxieties. These macroeconomic elements substantially impact Bitcoin and the broader crypto market, as they shape investor willingness to pour money into these volatile assets.
Bitcoin is currently trading at $60,625, grappling with the immediate uncertainty as it heads into the potential Death Cross.
