The Grayscale Bitcoin Trust GBTC dropped another 1.4% on Monday and is now down 31.7% in the past three months. Bitcoin prices hit their lowest levels in six months on Monday, dipping below $7,000 before recovering to around $7,230 in early afternoon trading.
Unfortunately for bitcoin bulls, the recent swoon has the cryptocurrency on the break of a bearish technical signal that has triggered steep sell-offs in the past.
After the 2017 bitcoin bubble burst last year, the cryptocurrency came back to life in early 2019, climbing as high as $1,280 in June. Since that peak, prices have drifted consistently lower.
Worst Yet To Come For Bitcoin?
EToro analyst Adam Vettese said Monday the new bitcoin lows were driven by the derivatives market after traders liquidated more than $100 million in positions overnight.
“Worse could be on the cards for the currency if it sees an expected ‘death cross’ – a sentiment indicator where the 50-day moving average price falls below the 200-day moving average to the downside,” Vessese said.
The two other times bitcoin experienced death crosses, the price of the cryptocurrency subsequently dropped more than 60%, he said.
As of Monday, bitcoin was trading well below both its 200-day simple moving average at $7,688 and its 50-day SMA at $8,805. The last time bitcoin experienced a death cross was May of 2018. At the time, bitcoin was trading at around $8,300, but it dropped as low as $3,251 within seven months of the cross.
Benzinga’s Take
Little has changed from a fundamental standpoint regarding bitcoin in the past couple of years. The cryptocurrency still polarizes investors, who remain divided on whether or not the currency will be a useful, viable, mainstream alternative to fiat currencies at some point down the line.
The price of bitcoin was around $7,194 at time of publication.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
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