11 August 2024
Crypto analyst Benjamin Cowen recently discussed the impact of the death cross indicator, which has appeared again on Bitcoin’s chart. Thanks to this indicator, the $62,000 price level has become crucial to Bitcoin avoiding another price crash.
Cowen noted in a video posted on his YouTube channel that Bitcoin is at risk of dropping lower if it fails to hold above $62,000 heading into the Death Cross. Bitcoin had rallied to as high as $62,000 after recovering from its price crash below $50,000 on August 5. The rise to $62,000 brought about the Death Cross, which now threatens lower prices for the flagship crypto.
The Death Cross And Its Impact On Bitcoin’s Price
The death cross indicator is usually considered bearish and suggests that a prolonged period of declining prices may be on the horizon for the asset in question. This death cross occurs when the 50-day moving average drops below its 200-day moving average. As Cowen revealed, Bitcoin’s 50-day moving average is currently at around $62,000.
As such, Bitcoin must reclaim and hold above the $62,000 price level soon enough, or it risks further price declines, with a drop below the psychological level of $60,000 already in sight. The crypto analyst specifically drew comparisons to the Death Cross, which occurred in 2019, to provide insights into what Bitcoin’s next move might be.
He noted that the Death Cross in 2019 marked a local top for the flagship crypto, as it went on to record lower highs after then, and its price was bearish for about four months afterward. However, Cowen admitted that things could play out differently this time, noting that indicators like these tend to play out in a “slightly different way” throughout different cycle phases.
The timing of this Death Cross could also provide insight into what might happen next for Bitcoin. Cowen noted that September is, on average, the worst month for Bitcoin, suggesting that the flagship crypto could suffer a downtrend that could extend into September.
It Boils Down To The Macro Side
Cowen revealed that whatever happens next for Bitcoin will mainly depend on external factors rather than the prevailing conditions in the crypto market. This includes macroeconomic factors like inflation and the labor market. Indeed, the macro side is believed to be responsible for the crypto crash on August 5 as fears about a recession heightened.
The US Federal Reserve has so far held off on cutting interest rates in a bid to bring inflation down to its desired 2%. However, their hesitation has led to projections that the US economy could soon enter a recession.
The July US job reports also showed that market participants have cause to be worried as the unemployment rate was higher than expected. The macro side significantly impacts Bitcoin and the crypto market because it largely determines how much money investors are willing to invest in these risk assets.