Although Bitcoin has seen a noticeable rebound following its negative price performance on the red Monday witnessed this week, the asset now appears to be at a critical juncture, according to prominent crypto analyst Benjamin Cowen.
Cowen disclosed in a series of posts on X that Bitcoin faces what traders call a “death cross”—a technical chart pattern that could signal either a potential recovery or further losses. However, BTC’s only ability to avoid the further plunge hinges on a notable key price point.
Key Price Level To Decide Bitcoin Fate
Given the current circumstances faced by Bitcoin, Cowen reveals that Bitcoin’s potential to overturn the looming price decline hinges on its performance relative to a key price marker: $62,000. This level is essential for Bitcoin to flip from resistance into support to wave off the bearish implications of the Death Cross.
Elaborating on the definition of “death cross,” Traders use this pattern to describe the crossover of the 50-day simple moving average (SMA) falling below the 200-day SMA, traditionally viewed as a predictor of potential price declines.
Although the outcome following such a pattern isn’t always straightforward or immediately bearish, historical data shows mixed results, making the current formation of this pattern critical.
Implications Of The Death Cross Formation
Cowen pointed out that Bitcoin’s reaction to the death cross has varied. For instance, following the death cross in 2023, Bitcoin avoided further declines and rallied, breaking above its 50-day SMA and using it as support for subsequent gains.
This pattern was also mirrored in previous years, such as 2019, 2021, and 2022, where Bitcoin experienced initial rises post-death cross but ultimately succumbed to the bearish expectations.
Cowen suggests that for Bitcoin to replicate the positive outcome seen in 2023, it must first rise above the $62,000 mark and maintain it as support.
The durability of this move will likely depend on first #BTC getting above its 50D SMA ($62k), and then holding it as support like it did in 2023.
If it fails to hold as support like 2019, then the slow grind down continues until a sufficient pivot from the Fed IMHO. pic.twitter.com/9LC77B2W14
— Benjamin Cowen (@intocryptoverse) August 8, 2024
While there is not any near-term catalyst so far that could support BTC in making the initial rise and flipping its resistance, the sustainability of such a rally might now heavily rely on broader economic conditions.
Particularly the monetary policies of the United States Federal Reserve. Notably, a pivot in interest rate policies could be a decisive factor for Bitcoin and other risk assets to make a major move, whether towards the upside or downside.
Featured image created with DALL-E, Chart from TradingView