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A History Lesson on Death Crosses

*tl;dr: A ‘death cross’ may happen soon. People attribute this to long-term downtrends but history tells us this isn’t always the case. Keep an open mind, plan for the best; plan for the worst, or, even better, just shut out the noise and keep holding.*

One of the near-term concerns for market participants is BTC’s imminent death cross. Simply put, a death cross is when the 50D SMA falls below the 200D SMA and can foreshadow a major sell-off and/or confirm a bear market. When looking back since BTC’s inception, **we can see several instances whereby a death cross occurred and either did or didn’t weigh materially on price**. Since many of these crosses occurred during a bear market, it came as no surprise that the death cross was followed by further downward pressure. However, with the death cross on pace to form in a little over a week (June 18), some are concerned that said cross will send the price lower and may even confirm BTC being in a bear market.

Until that time comes, it is too early to say with absolute certainty what will happen when BTC’s death cross comes. However, that doesn’t mean we shouldn’t be cognizant of what has happened in the past and lean on the past to set our expectations. That said, let’s take a look at BTC’s previous death crosses…

# Death Cross 1: March 25, 2020

https://preview.redd.it/sh4vx06uyj471.png?width=3106&format=png&auto=webp&s=6536013ebc999d7d47f130c9a12735cf4cd6369d

* This death cross came off the back of March 2020’s notorious “Black Thursday.”
* Price went on to correct -16% over a 5-day period before regaining momentum and trending higher.
* What’s most notable about this death cross is that BTC was already making higher highs leading into the cross itself. Unfortunately, the same can not be said of BTC’s forthcoming death cross.

# Death Cross 2: October 26, 2019

https://preview.redd.it/0ifh7b9ryj471.png?width=3100&format=png&auto=webp&s=ad5de9a128f723958ea2768ae0216528ddef20a1

* This death cross came several months after BTC hit a local high of roughly $13,400 in June and then entered into a downtrend. 
* On the day of the death cross, BTC surged as much as +19% before then resuming its downtrend. BTC also went on to trend lower into year-end.
* While we can clearly see that BTC exploded +40% between October 25 & 26, many forget that what drove this move higher was China‘s President Xi [saying](https://click.marketing.kraken.com/?qs=ff2157e40ad5e9b7d99423ba8633360bb00fcc444a5895d090b6fe8b360733baab5c2852fe82e8063464b62f075d4e89ef24a9da368b4124) the country should “seize the opportunity” to adopt blockchain.

# Death Cross 3: March 31, 2018

https://preview.redd.it/u9r4baxvyj471.png?width=3102&format=png&auto=webp&s=dfe2b81e6a173e269056c16d141751a815bb708c

* When this death cross occurred, it was already apparent to many that BTC was in a bear market. Anyone who was in the market at this time knew that 2017 was absolutely bonkers and BTC’s blow-off top from $20K was likely the beginning of the end.
* That said, although BTC only corrected -11.5% in the two days that followed, BTC went on to ultimately trend lower despite rallying considerably higher in April 2018

# Death Cross 4: September 14, 2015

https://preview.redd.it/dhksdl7xyj471.png?width=3102&format=png&auto=webp&s=668805719811c3a3cc66b4e76c6cd108e991d982

* This death cross stands out quite a bit, mostly because it came 9 months after BTC set a bear market bottom in January.
* Not only that, but BTC went on to rally nearly +120% into the first week of November. BTC would go on to correct -40% before regaining momentum and entering into its next bull market cycle.
* Lastly, you can see that this death cross coincided with no material move to the downside, the price largely traded sideways.

# Death Cross 5: September 4, 2014

https://preview.redd.it/hrqsflgyyj471.png?width=3104&format=png&auto=webp&s=c3a7d5f6913d14a9a0b7f5fd0f6ffcc2ba5ccbee

* As with most other death crosses, BTC was already in a bear market when this cross occurred and many knew it at the time. 
* Furthermore, the price was largely unchanged in the days that followed this cross. However, BTC did go on to sell-off meaningfully in the weeks that followed before slipping lower as the bear market carried on.

# Death Cross 6: April 9, 2014

https://preview.redd.it/rwlww8zzyj471.png?width=3108&format=png&auto=webp&s=5261606c3c98a58110820923cf0085e05b695d62

* Leading up to this death cross, BTC was in a downtrend for months and off -65% from its all-time high of ~$1,200 set in November 2013. That said, it comes as no surprise that what followed this death cross was further weakness.
* Perhaps what was surprising was the fact that BTC would correct more than -25% in the next couple of days that followed.
* BTC would go on to bounce higher and press to a local high of $550 come mid-April and even $680 in June, but BTC’s inability to set a higher-high in the macro trend only resulted in BTC continuing its slump lower.

# Death Cross Avoided: August 2013

https://preview.redd.it/b9452x61zj471.png?width=3096&format=png&auto=webp&s=a8bca11c1843f16957eff46b9ae8f7ccdccf4b17

* In all of BTC’s history, August 2013 was the only instance where a death cross was just barely avoided. 
* BTC’s ability to rally higher after roaring to an all-time high of $280 and correcting -83% caught many by surprise. The abrupt rebound is ultimately how BTC dodged scoring a death cross.
* BTC would go on to climb as high as $1,200 before entering into a bear market.

# So, What Does It All Mean???

With the exception of a few, many of BTC’s death crosses coincided either with 1). a sell-off in the days that followed and/or 2). a continued macro downtrend that confirmed a bear market. That said, one ought to be open-minded about the forthcoming death cross being accompanied by downside price action and potentially even a continuation of the current downtrend. 

On the flip side, we should also remember that BTC *doesn’t have to do anything*. All market cycles are different and there are a number of things that make this market cycle different from others. With that in mind, one could argue there is just as good of a chance of BTC doing nothing/climbing higher as there is of BTC plunging. At the end of the day, wherever the market converges to is what will happen. Don’t expect for anything to occur, but do plan for the worst.

[source: Kraken Intelligence Daily Report]



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23 Comments

  1. I feel that too much technical analysis and “price prediction ” may cause the market to follow, “said ” pattern.

    A person may have the ability to think, and understand the situation but people are stupid.

  2. The most telling part of this post for me is the numbers at the far right. Comparing bitcoins value (in us dollars) 8 years ago to even just 8 months ago is pretty amazing. Makes you wonder what the next 8 years will bring

  3. I feel like these classical TA terms really just don’t work as well in the crypto space.

    I mean I know it’s a total meme and everything but I feel like BART patterns hold more weight in this space than death crosses and moving averages.

  4. So…. I’ll just scratch any fiat I can find together to be ready to buy (which will be none as it’s all stuck in crypto already and keeps blushing red)

    Also I’ll grab some popcorn and enjoy the show of expectations clashing with reality on the death cross day.

  5. No fundamentals have changed in the tech. It can go up or down or sideways

    Dollar cost average

    Dont look at the chart, that is a game designed to separate you from your retirement and good life

    When in doubt zoom out! You cant see the panic of a death cross in the 10 year chart

    HODL

  6. **A simple guide on how to get people to sell to get a dip**

    If you want people to sell to get a dip so you can buy in at a lower price or close off your derivative position, below is a simple guide on how you can do this:

    – write up a post about some crypto FUD (China, India, Biden tax etc.) or that you are selling for some personal tragic circumstances (like paying for surgery, other people’s surgery etc.).
    – make the post really really long to show that you have done some deep valid research on it. If it’s personal tragic circumstances, it doesn’t need to be long, just make it sound as pitiful as possible or for a god damn good human cause.
    – pay money to buy bots to upvote your post (this is important!). This will push your post up the queue. Make sure you receive the upvotes in an incremental way otherwise people might suspect it’s all bot votes.
    – if possible, pay for bots to post comments too. The more comments, the less people will suspect it’s fake and it will also invite more people to comment too.
    – cherry on top is buy those Reddit rewards and award your post with as many Reddit awards as you can possibly buy. You can do this with multiple Reddit accounts on different devices.

    Good luck!

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