Bitcoin, the leading cryptocurrency, has recently encountered a concerning technical indicator known as a “death cross” on its short-term charts. This development follows a significant sell-off in the overall cryptocurrency market, causing Bitcoin to plummet to a low of $49,050 during the previous trading session. The market saw a massive erasure of over $370 billion in total crypto asset market capitalization within a 24-hour period, marking Bitcoin’s most substantial single-day drop in three years.
The recent market turmoil, resulting in the “death cross” formation, was attributed to a widespread market rout that affected equities globally. A death cross is typically recognized when a short-term moving average intersects below a long-term moving average, often indicating a bearish market sentiment. In Bitcoin’s case, this bearish signal became apparent on the four-hour chart when the 50-hour moving average crossed below the 200-hour moving average.
Despite the bearish signal, Bitcoin demonstrated resilience and initiated a slight recovery on the following day. The cryptocurrency managed to regain some lost ground after hitting a six-month low of $49,050, particularly during the debut of newly introduced crypto exchange-traded funds. As of the latest update, Bitcoin exhibited a 9% increase within a 24-hour period, reaching $54,851 as per the CoinMarketCap data.
IntoTheBlock, a respected on-chain analytics firm, highlighted crucial levels to monitor as Bitcoin strives for recovery. On the positive side, resistance levels are relatively dispersed, with notable historical volume levels recorded at $55,500 and $60,500. Conversely, if a downward trend persists, significant demand levels are concentrated below $50,000, with robust support expected around $47,500.
Notably, Bitcoin wallets containing between 1,000 and 10,000 BTC demonstrated confidence during the recent market dip. These wallets consistently increased their holdings as prices dropped, showcasing strong conviction in the cryptocurrency’s long-term potential. Conversely, wallets holding less than 1 BTC exhibited weaker hands, with a notable decrease in holdings during the recent market downturn.