An impending bearish crossover, a technical pattern theoretically suggesting continued weakness in the Bitcoin (BTC) price, could be a trap for sellers and portend a bullish revival.
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A three-day-candlestick chart shows the simple moving average (SMA) of the past 100 candlesticks is on the verge of crossing below the 200-candle SMA, confirming the first bearish crossover of the two averages since December 2018.
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Historically, the crossover has marked an end of bear markets and paved the way for notable bull runs.
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The averages crossed bearishly in December 2018, trapping sellers on the wrong side of the market. Bitcoin bottomed near $3,200 and spent the following three months building a base for a rally. The cryptocurrency hit a high of $13,800 by the end of June 2019.
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The bear cross of February 2015 coincided with peak selling, and Bitcoin began a multiyear bull run seven months later. The first bear cross, dated June 2012, also trapped sellers on the wrong side of the market.
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Crossovers between longer duration moving averages are known to be contrary indicators because they are based on past data and tend to lag prices. The market is often battered, oversold and overdue for a reversal higher by the time the crossover is confirmed.
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Past performance is not a guarantee of future results. That said, history could repeat itself because the Fed's hawkishness, or anti-stimulus stance, appears to have peaked and traders are now pricing interest rate cuts for 2023.
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Bitcoin was last trading near $21,730, representing a 6% gain on a 24-hour basis.
