Bitcoin is at a death cross moment again. Photo / Bloomberg
Bitcoin is at a death cross moment again. Photo / Bloomberg
People who do so-called "technical analysis" on the pricing charts of stocks and other financial markets have a lot of funny names for things.
There's the "dead cat bounce," a "reverse hockey stick," a "diamond top" or a "spinning top candle stick pattern" and plenty of other bewildering jargon. Thecolourful array of terms are meant to denote something supposedly significant, and in turn signal a potential near-term future.
This week analysts have been making noise about bitcoin approaching one of these pseudoscientific warnings: a dreaded "death cross".
So what does this mean?
A death cross is a bearish term associated with a downward market trend and occurs when the 50-day (short-term) moving average of a stock price crosses below the 200-day (long-term) moving average.
For a dedicated chartist, the death cross means things are heading south.
While many cryptocurrency investors don't follow technical analysis, the popularity of bitcoin and other cryptocurrencies means people have brought to bear this sort of analysis on the market.
"This chart continues to suggest to me that we could see bitcoin go all the way back below US$1,000 ($1,390) per bitcoin," Bloomberg TV anchor and analyst Abigail Doolittle said this week.
Her colleague Mike McGlone, a commodities strategists, agreed saying: "The death cross kind of scares me. The market is turning now."
In any case, it hasn't been a good year for bitcoin after its meteoric rise late last year.
"There's been a definitive shift over the past couple of months after the bubble activity at the end of 2017," Paul Day, a technical analyst at Market Securities Dubai told Bloomberg last week.
He is predicting a 76 per cent tumble from late February highs that would take the cryptocurrency under US$3,000.
However while technical analysis has some avid followers, it's far from reliable.
The last time the death cross pattern occurred for bitcoin was in September 2015. After that time, the bitcoin price rallied from around US$230 to US$500 by early November that year.
