In recent days, cryptocurrencies have recovered after a major dump in late May / early June. However, the new pump has been interrupted by a series of events such as the FED’s statements published yesterday (regarding inflation and global economic trends) and the expectation of a very scary event for any publicly tradable asset: the death cross! But let’s see what this is all about and what the new price of bitcoin could be in case this event seriously occurs.
Bitcoin and the Death Cross
The Death Cross occurs when the 50-day simple moving average (50-day SMA) begins to close below the 200-day simple moving average (200-day SMA). When such an event occurs, price corrections are usually very strong, especially in the case of assets as volatile as Bitcoin or the rest of the cryptocurrencies. Just to give an example, Bitcoin has already seen several Death Crosses in the past that have led to it taking a lot of value in the short term.
“When a death cross occurs, Bitcoin sees deeper contractions,” noted Rekt Capital, a pseudonymous market analyst. “In 2014, a death cross preceded a 71% collapse. In 2017, a 65% collapse, and in 2019, a 55% collapse.” Such collapses can be scary when we look at altcoins. Usually, when Bitcoin or Ethereum fall by 20-30%, altcoins manage to collapse by as much as 50-70% (as occurred about 1 month ago). So what would happen if Bitcoin were to make similar corrections as it has in the past? The altcoins would return to super-discounted prices, so it would definitely be time to get back into the preferred projects again. Of course, charts don’t always guess, so this situation might not even happen. It will all depend on the Celebrities, Banks and big Investment firms that have positions in Bitcoin. Maybe they won’t want it to collapse as much!
Whether the Death Cross occurs or not, if you are a strong believer in Bitcoin and cryptocurrencies in general, such events should not scare you at all as bitcoin has managed to come back stronger than before, reaching new All Time Highs after each halving. Again, if bitcoin corrects to 20k, this will certainly not be a problem for holders, i.e. long term investors. Bitcoin will continue to rise over the years and we will surely see crazy prices in the next 2-3 halvings. Many predictions speak of 200-300k, others even go as high as a million dollars a piece! The same is true for Ethereum and all other altcoins that are serious, have use cases and generate fees and revenue. This does not apply to tokens created with the intent to enrich their founders and investors. And believe me, there are a lot of useless tokens and projects that fall into this category!
To recap: it doesn’t matter what the price of Bitcoin or a project is in the short term, what matters is that these projects will change the world and sooner or later they will get the price they deserve!