'Cross of death' on Bitcoin's 3-day chart can cause correction of up to 40% of BTC price
Cross of death" on the 3-day chart only happened twice in the history of Bitcoin, and in both caused devaluations of up to 40% of the price of BTC in the month following the crossing between 50- and 200-day moving averages.
The three-day chart is not usually very popular among traders to evaluate the Bitcoin price action (BTC). However, the imminence of the formation of a "death cross" in this graph in which each candle represents 72 hours of negotiations is an indication that a severe correction can occur in the short term.
Technically, a death cross is configured when the simple moving average of 50 candles crosses the moving average of 200 candles in a downward direction. Experts in technical analysis are usually unanimous in considering this graphic pattern an indicator of deeper correction.
A good reason not to ignore the formation of this bass pattern on the three-day Bitcoin chart is that it occurred only two other times in the history of the largest cryptocurrency on the market. In both, Bitcoin was going through bearish cycles similar to the current moment, with the price approximately 40% below its historical high - although not all analysts agree that bears are in control of the market now.
A month after the "crosses of death" were confirmed, the price of BTC corrected up to 40% compared to the price they were before the crossing between the 50- and 200-day moving averages.
Considering the price of US$ 40,110 in the late afternoon of Monday, once the new "cross of death" was established and the price of BTC could still retreat to the range of US$ 24,000.
Correction history
The first time the "cross of death" on the three-day chart happened in the history of Bitcoin was in mid-December 2014. After a severe correction immediately after the event, the price of BTC was to get the $208.01 fund on January 15, 2015.
The chart pattern was set again in mid-November 2018, when the BTC/USD pair was quoted at approximately $6,400. On December 15, the price of BTC reached a minimum of $3,156.
On the other hand, also in both cases, the funds that followed the crosses of death in the three-day graph recorded the minimums of both cycles. Afterwards, Bitcoin resumed slow and gradual growth to renew its historic highs in 2017 and 2021.
Past behaviors are not a guarantee of future developments, but if history repeats itself, Bitcoin may be facing its last correction before a reversal of the definitive trend towards better days.