So why was everyone ‘buying’ during the deathcross run?
Throughout June, everyone who invested or trade-in Bitcoin knew about the incoming ‘deadly’ deathcross.
Deathcross, as per definition from Investopedia:
What Is a Death Cross?
The death cross is a technical chart pattern indicating the potential for a major sell-off. The death cross appears on a chart when a stock’s short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages.
Typically, a deathcross is inevitable in the market. It could also be a sign of a downtrend and an upcoming bear market.
As per Figure 1 based on Trading View Chart, on June 23rd, the deathcross did happen. However, instead of traders selling off their bitcoin assets, there was a large volume of buying power.
Why is that?
Here are some factors to consider:
- A deathcross can be seen as a “lagging indicator” and can produce a false signal.
- There were many commentaries on social media about the upcoming death cross. Traders were already seen exiting the market a few days beforehand to avoid a possible huge downfall and/or locked their gains.
- Others saw this as an opportunity to buy since everyone would probably be selling the news.
Despite its power in foretelling a possible future bear market, no one can really predict the future market price of any asset. Other signals should accompany an additional indicator before putting in a trade.
My 2 cents advice — always trade at your own risk.