Bitcoin

Bitcoin “Death Cross” – don’t believe the hype

A lot of noise within the media in the week a few “death cross” in Bitcoin. A “death cross” may be a term utilized in technical analysis to explain when the 50 day moving average crosses below the 200 day moving average. In theory, its purpose is to signal a change in trend to the downside.
A change in trend coming after Bitcoin has already fallen over 50% from its $64,895 high from April?

Feeling a touch sceptical about the “death cross” i assumed it might be interesting to seem back at the success rate of past “death cross” sell signals in Bitcoin.

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For the rear test a brief Bitcoin trade was entered into on the primary daily close after the 50 day ma crossed below the 200 day ma. The trade would be exited on the primary daily close after the 50 day moving average crossed back above the 200 day ma.

With limited data history, it might be fair to mention that the sample size I collated below is a smaller amount than required to return up with a strong conclusion. Nevertheless, after rounding trade entries and exits to the closest dollar this is often what I found.

Trade 1. Short Bitcoin 9th April 2014 at 442. Exited 12th July 2014 at 638 = -$196.00

Trade 2. Short Bitcoin 4th September 2014 at 487. Exited 15th of July 2015 at 286 = +$201.00

Trade 3. Short Bitcoin 15th of September 2015 at 230. Exited 28th of October 2015 at 305 = -$75.00

Trade 4. Short Bitcoin 31st of March 2018 at 6928. Exited 23rd of April 2019 at 5531= +$1397.00

Trade 5. Short Bitcoin 26th of October 2019 at 9253. Exited 18th of February 2020 at 10185 = -$932.00

Trade 6. Short Bitcoin 25th of March 2020 at 6692. Exited 21st of May 2020 at 9516 = -$2824.00

As viewed above, my scepticism towards the “death cross” sell signal was well-founded. Of the six “death cross” trades since 2012, there have been four losing trades amounting to a loss of -$2429.00.

If truth be told, after Bitcoin (and Ethereum) made new lows (Wave v) overnight before a recovery into the close, it’s provided the setup for a possible recovery in Bitcoin.

Supported by bullish divergence on the RSI, i will be able to adopt a more positive view of Bitcoin upon upside follow through and a daily close above $34,000 in today’s session, leaning against the overnight low at $28,600. The initial upside target is resistance near $42,000.

Source Tradingview. The figures stated areas of the 23rd of June 2021. Past performance isn’t a reliable indicator of future performance. This report doesn’t contain and isn’t to be taken as containing any financial product advice or financial product recommendation

Bitcoin is Finished? US Dollar says otherwise!

If traders believe that DXY will still act as a number one indicator for Bitcoin, they ought to expect Bitcoin to bounce.
China has been on a rampage trying to crackdown on cryptocurrencies, threatening banks and miners throughout the country. Over this past weekend, China ordered domestic banks and payment platforms to prevent provides services linked to trading of virtual currencies. As a result, Bitcoin has been selling off on fears that way forward for currency might not be Bitcoin, but rather simply digital fiat currencies. However, China isn’t the sole one spreading fear into crypto HODLers. An Elon Musk tweet can send Bitcoin in either direction, counting on how he feels that day. The United States government retrieved ransom Bitcoin, which until now , was thought to be untraceable. additionally , more and more officialdom within the US and round the world are calling for regulation of cryptos (governments always way their piece of your money!).

So, Bitcoin is moving lower. In February, Bitcoin began forming a rounding top formation and reached its all-time high on April 14th at 64895.22, which happened to be an equivalent day because the Coinbase IPO (coincidence?). On May 10th, the cryptocurrency began to unload aggressively and stalled near 30,000. Bitcoin consolidated during a flag pattern from May 10th to June 22nd between 30,066 and 41,341. On June 19th, the 50 Day Moving Average crossed below the 200 Day Moving Average forming a “Death Cross”, which because the name may imply, may be a bearish signal. Today, price broke below the 30,066 lows and therefore the bottom of the flag. The target of a flag pattern is that the length of the flag poll added to the breakdown point from the flag, which during this case targets near 11,500.

If we overlay a chart of DXY (blue line) on a chart of Bitcoin, it appears that the US Dollar Index has been leading BTC since February. Price in DXY formed 3 higher highs before Bitcoin. The US Dollar then began moving lower on March 30th, before the Bitcoin selloff which began in April 14th. DXY bottomed on May 25th and commenced moving higher, with a breakout on June 16th (FOMC). The US Dollar Index traced to the 61.8% Fibonacci retracement level from the March 31st highs to the May 25th lows, near 92.00. If traders expect this relationship to continue, BTC could also be certain an aggressive bounce soon. It’s difficult to work out where BTC may bounce to if it’s following DXY, as we don’t yet know if today’s low goes to be the low to live from. However, if we assume it’s , the 61.8% Fibonacci retracement in Bitcoin from the April 14th highs to today’s lows is near 51,030!

BTC by itself points to a continued selloff to close 11,500. However, the present relationship between US Dollar and Bitcoin points to a bounce to 51,030. Which is right? If traders believe that DXY will still act as a number one indicator for Bitcoin, they ought to expect Bitcoin to bounce. If traders feel the flag pattern may be a more reliable formation, BTC will move lower. Perhaps BTC won’t reach either level. However, if Bullard and Kaplan still be hawkish, while Williams and Powell still be bearish, there’s bound to be good 2-way action within the coming months in both BTC and therefore the US Dollar!