- Historically, the bearish Bitcoin cross precedes significant price increases.
- Current market indicators point to possible short-term volatility, followed by a potential uptrend.
In the cryptocurrency market, it currently seems as if Bitcoin (BTC) is struggling to establish a consistent uptrend.
Although Bitcoin has hit highs of nearly $62,000 and lows of around $56,000 over the past two weeks, price volatility has investors questioning its future trajectory.
At press time, the cryptocurrency was trading at around $58,550, up a slight 0.7 percent from the previous day, with fluctuations between a 24-hour high of $59,833 and a low of $57,812.
Bitcoin: Indicators of a possible downturn
Amid this uncertain market behavior, a notable pattern has emerged that could provide clues about future price movements.
Bitcoin has formed a so-called “bearish cross” on its daily chart, a technical indicator that could indicate an impending decline.
Source: Mags on X
This term refers to the event when Bitcoin’s 50-day SMA (simple moving average), currently at $61,749, falls below its 200-day SMA, which stands at $62,485.
This configuration, often seen as a sign of short-term market weakness, was pointed out by the pseudonymous dealer Mags on the social media platform X (formerly Twitter).
Although the formation of this pattern in the chart sounds clearly negative, this may not necessarily be the case at the moment.
Mags pointed out that in the past, the formation of this bearish cross pattern on the BTC chart was followed by significant price increases.
For example, after a bearish cross in September 2023, the Bitcoin price rose by about 50% within four months. Similarly, after a cross in July 2021, the price rose by 54% in the same period.
Mags says if this pattern holds true, Bitcoin could once again experience a period of fluctuating prices before potentially reclaiming its moving averages and initiating a bullish crossover, leading to another strong rally.
The underlying principles
Despite the focus on chart patterns, it is worth considering Bitcoin’s fundamental metrics, which provide insight into the broader market position and investor behavior.
Recent Data by Glassnode showed that the number of active Bitcoin addresses saw a significant decline from 897,000 in early July to 615,000 in mid-August.
Source: Glassnode
However, there has recently been a rise to over 725,000 addresses, which represents an increase of approximately 17.89%.
This increase in active addresses could indicate growing engagement within the Bitcoin network and potentially be a signal of a positive change in market sentiment.
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In addition, the number of new Bitcoin addresses, an indicator of new investor interest, shown Signs of recovery.
After a drop to 251,000 in early August, there was a rise to over 300,000 new addresses, indicating renewed interest and potentially stronger capital inflow into Bitcoin.
Source: Glassnode
