The cryptocurrency market did not start 2022 on a good note, losing almost a trillion dollars in value since late last year. Leading asset Bitcoin has been fortunate enough to endure only small losses, dropping by just 12% since the year began. Some other popular coins like Solana (SOL), Terra (LUNA), and Avalanche (AVAX), are down by as much as 20% over the past week.
However, Bitcoin may be in for some further losses as it approaches a much-feared “Death Cross“, an event that commonly precedes a significant drop in value. Despite bouncing off $40k and recovering a few percentage points, sentiment is low, fear is high and investors seem to be existing speculative, high-risk markets.
What is a Death Cross?
A death cross is an event monitored by technical analysts that sees an asset’s 50-day moving average cross below its 200-day moving average. Essentially, this means the asset is falling faster on average over the past 50 days than the previous 200 days, indicating a potential downward spiral.
The opposite to a death cross is known as a golden cross and occurs when the 50-day moving average crosses above the 200-day, revealing rapid upward movement. For Bitcoin, a golden cross event occured in mid-September, after which Bitcoin catapulted to it’s all-time high (ATH) of $69,000. With the King of Crypto now down almost 50% and struggling to hold above $40,000, many analysts believe BTC is officially in a bear market likely to see further losses from here.