Bitcoin has dropped below $40,000 for the first time in 3.5 months. Bitcoin has fallen to its lowest level since the end of September as the leading cryptocurrency in the world showed no end to its unpredictability.
The world’s leading cryptocurrency dropped to $39,663.18, from a record high of more than $66,000 in October. After a tumble Monday, it recovered a bit, rising to $41,198. Meanwhile, its recent decline continues to drag other cryptocurrencies down.
Chief Market Analyst at Avatrade, Naeem Aslam said, “The main culprit behind the slump in crypto prices is the Fed’s decision to withdraw massive liquidity, which has been pumped into markets since the onset of the coronavirus pandemic”.
The dip in bitcoin brings about a looming ‘Death Cross’ in price charts. Death Cross is an indicator that appears when the 50-day moving average (MA) goes down below 200-day MA.
Bitcoin peaked up to nearly $69,000 on the 10th of November, 2021, and has since declined by 40%. The leading crypto dipped over 12% in the last seven days to January 9, registering its biggest weekly dip since early December.
Impending death cross, plus the souring macro outlook may bolster sentiments. The technical indicator’s record as a predictor of the bear market is mixed.
Many of bitcoin’s previous death crosses, including those witnessed in 2014 and 2018 coincided with “either a sell-off in the days that followed or a continued macro downtrend that confirmed a bear market”.
Although, death crosses that were seen last June and late March 2020, and October 2019 were false signals or bear traps that marked major price bottoms. Given that they are based on backward-looking data, it is unreliable moving average crossovers as standalone indicators. They even tend to lag prices.
The market is usually overloaded and due for an increase by the time the crossover gets confirmed, as was the case in June, last year, and late March 2020.
Bitcoin Slides Below $40,000, First Time In 3.5 Months
