Bitcoin Death Cross That Last Preceded A 66% Drop Is Back

A cryptocurrency analyst has pointed out how Bitcoin has recently formed a technical crossover that preceded bearish shifts in the past.

In a new post on X, analyst Ali Martinez has shared a daily price chart for Bitcoin showcasing a crossover between two simple moving averages (SMAs) that the asset has gone through recently.

An SMA is a statistical tool that averages a quantity over a given period of time and that, as its name suggests, updates in time with the quantity. This tool can be useful for studying long-term trends, as it smooths out the graph by eliminating short-term fluctuations.

SMAs can be taken over any window, but in the context of the current topic, two specific periods are of relevance: 21-day and 50-day. Below is the chart posted by Martinez that shows the trend in these SMAs for Bitcoin over the past decade.

From the graph, it’s visible that the daily Bitcoin price has seen its 21-day SMA fall below the 50-day one recently. In the past, this crossover has tended to act as a “death cross” for the cryptocurrency, with its price plunging after the signal’s appearance.

In the chart, the analyst has highlighted the previous instances of this death cross. It would appear that the asset experienced drawdowns ranging between 54% and 69% following the crossover.

The most recent occurrence of the crossover was in 2022, leading into a price decline of almost 66% to the bear market bottom. Given the past pattern, it only remains to be seen whether the 21-day SMA going below the 50-day SMA will prove to be bearish for Bitcoin this time.

In the scenario that bearish momentum does follow for the asset, it could be at risk of breaching below an on-chain level known as the Realized Price-to-Liveliness Ratio. This level represents the ratio between two on-chain indicators: the Realized Price and Liveliness.

The first of these tracks the cost basis of the average investor or address on the Bitcoin blockchain, while the latter encapsulates the spending/HODLing behavior of long-term investors.

As Martinez has highlighted in another X post, Bitcoin has been trading near the Realized Price-to-Liveliness Ratio recently.

As displayed in the above graph, the Bitcoin Realized Price-to-Liveliness Ratio is situated around $87,500 right now. BTC briefly fell below this mark during the Sunday dip, but the coin has since recovered back above it.

“The last time Bitcoin $BTC fell below the Realized Price-to-Liveliness Ratio, it moved toward the Realized Price,” noted the analyst. Currently, the Realized Price is located at $56,000.

At the time of writing, Bitcoin is floating around $89,500, up 2% in the last seven days.