Renowned crypto analyst Benjamin Cowen recently discussed the significance of the death cross indicator reappearing on Bitcoin’s chart. This indicator has now made the $62,000 price level crucial for Bitcoin to avoid another price crash.
In a video shared on his YouTube channel, Cowen highlighted the risk of Bitcoin dropping lower if it fails to maintain its position above $62,000 leading into the Death Cross. Despite rallying to $62,000 after recovering from the price plunge below $50,000 on August 5, Bitcoin’s ascent to this level ushered in the ominous Death Cross, which now poses a threat of lower prices for the leading cryptocurrency.
Deciphering the Impact of the Death Cross on Bitcoin’s Price Movements
The death cross indicator is typically viewed as bearish, signaling a potential period of declining prices for the asset when the 50-day moving average dips below the 200-day moving average. Currently, Bitcoin’s 50-day moving average hovers around $62,000, underscoring the importance of reclaiming and sustaining this price level to avoid further price attrition, with the psychological milestone of $60,000 looming not far ahead.
Cowen drew parallels with the 2019 Death Cross episode to offer insights into Bitcoin’s probable trajectory. Back then, the Death Cross marked a local peak for Bitcoin, leading to subsequent lower highs and a bearish phase lasting about four months. However, Cowen acknowledged the potential for different outcomes this time, given the evolving nature of market indicators across distinct cycle phases.
The timing of this new Death Cross holds significance, as September historically proves to be a challenging month for Bitcoin, hinting at a potential downtrend extending into the following month.
Macro Factors Steer Bitcoin’s Course
Cowen emphasized that Bitcoin’s future trajectory hinges largely on external macroeconomic factors rather than internal market dynamics. Influences such as inflation rates and labor market conditions play a pivotal role in shaping Bitcoin’s price movements. The sharp crypto market downturn on August 5 was attributed to mounting concerns about a looming recession.
Despite the US Federal Reserve refraining from interest rate cuts to curb inflation, apprehensions about an impending economic downturn linger. The latest data from July’s US job reports, revealing a higher-than-expected unemployment rate, further fuel investor uncertainties. The macro side has a profound impact on Bitcoin and the overall crypto market, influencing investor sentiment and capital allocation towards these risk assets.
