Bitcoin Indicators Point to Death Cross—Should You Be Worried?
Bitcoin is on a verge of forming a death cross on the daily time frame. If this happens it could mean BTC is staring major downtrend.
Key Takeaways
- Institutions are actively injecting significant funds into the market.
- Large BTC holders have been increasing their holdings during price dips.
- Small BTC holders generally sell during market downturns.
Recent developments in the crypto market have sparked a mix of caution and optimism among investors. While the looming death cross —a bearish signal where the 50-day moving average crosses below the 200-day moving average—has many on edge, there is a silver lining.
Institutions are stepping in to buy the dip, injecting significant funds into the market. Also, wallets between 1,000 and 10,000 BTC have shown resilience, increasing their holdings amid the price drop, reflecting strong confidence.
Bitcoin’s price recovered 16% from its Aug. 5 low, exchanging hands at $57,460 at press time.
Bitcoin On-chain Data
Institutional Movements
Major institutions have been actively injecting funds into the market. For instance, on Aug. 7, Cumberland received 95 million USDT from the Tether Treasury and distributed it across exchanges such as Coinbase, Kraken, OKX, and Forwarder.
Since Oct. 20, 2023, Cumberland has put 6.28 billion USDT into the crypto ecosystem.
Wallet Activity
According to IntoTheBlock , wallets holding between 1,000 and 10,000 BTC have consistently increased their holdings during recent price dips, signaling strong confidence among larger holders. This behavior contrasts sharply with wallets holding less than 1 BTC, which have experienced a substantial decrease in holdings.
Market Sentiment
The divergence in behavior between large and small wallet holders underscores varying levels of market sentiment and risk tolerance. Larger holders take advantage of the dips to accumulate more BTC. Meanwhile, smaller holders are more likely to sell during periods of uncertainty.
BTC Price Analysis
After reaching a low of $53,746 on July 5, Bitcoin rebounded by nearly 31%, peaking at $69,900 on July 29. This recovery suggests a potential bullish trend. However, BTC’s ascent came to a halt at the descending channel’s resistance from March 13, when it reached its all-time high.
The subsequent downturn brought Bitcoin to a lower low of $49,600 by Aug. 5, but the daily candle closed at $54,000—above the descending support. This is still a good sign because buyers have stepped in and brought the price back.
On the other hand, the daily chart moving averages of 50-day and 200-day are starting to form a death cross.
This is a major caution sign, as the daily chart indicates a major trend shift. With Bitcoin’s price in a descending channel, there is still a chance it is in a corrective structure before moving to the upside.
However, if the price exceeds its descending support and a death cross is confirmed, we will receive a major bearish signal. In that case, these technical indicators will point out that instead of the descending channel being a corrective structure, it was the beginning of a larger, lasting descending trend.
With BTC on an upward trajectory, we will see what happens and if this 16% recovery today can lead to a bullish reversal. Bitcoin could face an even larger drop in the coming days if it reencounters strong resistance.
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