Dec 2, 2019 at 09:00 UTCUpdated Dec 2, 2019 at 08:35 UTC
The death cross. Just say it out loud. It doesn’t sound good. And it’s not. In fact it’s quite bad.
For most of October, analysts in the bitcoin market were warning that the death cross was coming – using what’s known in the trading business as technical analysis.
Technical analysis, or TA for short, is the art of divining future price movements by studying charts detailing how various assets have traded in the past. Patterns are discovered. Those patterns are compared with patterns that occurred previously. The assumption is that the past patterns will hold in the future, providing price predictions and a good chance to profit.
A death cross, in the practice of TA, occurs when the line tracking an asset’s price average over the prior 50 days falls below the line tracking its 200-day moving average. The appearance of a death cross is considered the start of a bearish trend: The last time it happened in the bitcoin market, in March 2008, prices tumbled by more than half over the next nine months.
So, it was considered unusually bearish when this year’s death cross finally appeared on Oct. 25, or thereabouts. Bitcoin’s price closed at $8,662 that day, and over the next few weeks it would tumble more than $2,000. Some analysts say the price drop was caused by a crackdown on cryptocurrency speculation in China. But TA believers say the whole thing was apparent from the charts.
“Once the death cross happens, we’re in a situation where the moving averages are screaming bearish,” says Big Chonis, a pseudonymous 41-year-old Massachusetts man with 43,000 Twitter followers and a separate, subscription-based TA feed. He asked that his real name not be used,