Bitcoin faces an important test as it approaches a potential death cross on its daily chart.
To avoid this, Bitcoin needs to break through the $62,000 resistance level, according to a new analysis.
What is death cross?
A death cross occurs when the 50-day simple moving average, aka SMA crosses below the 200-day SMA, signaling a downturn.
Right now, Bitcoin’s 50-day and 200-day SMAs are closely aligned at around $61,998 and $61,882, respectively. Not a good look.
The term death cross is derived from its reputation for reliably predicting price declines. Not with 100% success rate, of course, as the outcomes following such crossovers have been inconsistent.
For example, during the last daily death cross in 2023, Bitcoin rallied shortly afterward, surpassing its 50-day SMA and using it as support before climbing higher. No one expected it.
Why the $62,000 level is important?
The situation is different this time, with $62,000 emerging as a strong resistance point.
Analyst Benjamin Cowen suggests that if Bitcoin can break above this level and maintain it as support, it could avoid the typical bearish consequences of a death cross.
If not, failure to do so might lead to further losses. It’s not called death cross by accident.
Cowen also told that a shift in U.S. Federal Reserve policy on interest rates could be necessary to reignite enthusiasm for crypto and other risk assets. Macroeconomic factors aren’t supportive either.
Now: ’Why I didn’t buy at $50k?’ Five days ago, at $50k: ’Ain’t buying this stuff, it’s dead.’
Bitcoin has shown signs of recovery, reaching $62,775 before settling slightly lower.
Despite these gains, there’s been little movement in futures market open interest, showing that the price bounce may have been driven largely by short sellers covering their positions.
Julio Moreno from CryptoQuant pointed out that the recovery has been primarily fueled by these shorts, while fellow analyst Axel Adler Jr. named $62,000 as a key resistance level.
At the same time, major support remains at the recent six-month lows, just below $50,000.
