U.Today – The possible formation of a death cross, an indicator that hints at a possible bearish reversal when a short-term moving average crosses below a long-term moving average, is at a critical level.
Bitcoin’s 50-day and 200-day moving averages are progressively converging, as the chart illustrates, raising questions about the asset’s potential price movements. Because it typically signals impending bearish pressure, a death cross frequently causes traders to exercise increased caution. This pattern indicates that Bitcoin may be on the cusp of entering an extended bear market.
However, it is important to keep the broader market environment in mind, as death crosses do not always result in noticeable price drops. Right now, the price of Bitcoin is hovering around $56,000. In the near future, it will be important to keep an eye on a few key price levels.
To avoid further losses, the asset must hold the $58,000 support level as the first target. This is the next important support level, and if BTC falls below it, it will find stability again at $54,000. For a further bullish trajectory to continue, Bitcoin must overcome the resistance at $60,000.
On-chain data also points to mixed signals. On-chain metrics such as network net growth and large transactions remain neutral, indicating that there is no clear trend in the current state of Bitcoin. In contrast, signals from exchanges are mostly neutral or bullish. The fact that investors are not currently investing heavily in the asset, as indicated by negative exchange net flows, may indicate that the market is feeling cautious.
With neutral on-chain data and the possibility of a death cross, Bitcoin’s immediate price action is unpredictable. While there may be a short-term downside risk associated with the death cross, Bitcoin has a track record of resilience and has recovered from similar circumstances in the past.
This article was originally published on U.Today
