Bitcoin continued to struggle in the market as it dropped from US$40,000 on June 15 to US$35,286 only a week after. This development incited a warning from Coinbase co-founder Fred Ehrsam about cryptocurrency and the looming death cross on Bitcoin.
According to Ehrsam, smaller cryptocurrencies won’t survive Bitcoin’s death cross since there will be millions of cryptocurrencies just like there are millions of websites on the internet and most won’t work.
The ‘death cross’ is a bearish term used to gauge the lagging price indicator of a certain asset in the market. When an asset’s 50-day moving average crosses below the 200-day average, it can enter a bear market territory.
Since its all-time high of US$60,000 last April, Bitcoin’s price has dropped down to almost 50%. The last Bitcoin death cross occurred in March 2020 during the COVID-19 global lockdown. Previous death crosses on Bitcoin led to a price decline of up to 70% in 2018 and 47% in 2019.
Regarding non-fungible tokens (NFT), Ehrsam also added that these tokens would eventually lose their lustre in 4 to 5 years. He compared the NFT craze to Silicone Valley startups from the ‘90s wherein most of them rapidly increased in value but eventually disappeared months or years after.
Bitcoin’s fate amidst looming death cross
ITI Capital markets head Stephen Kelso said that speculative reports suggest that Bitcoin could soon drop to US$20,000. According to him, this can be a reference to the looming bearish cross of the digital currency.
However, some analysts say that this downtrend is part of a wider consolidation from the highs experienced by Bitcoin in the first few months of 2021. Chief Strategist of investment research firm Sierra Alpha, Dave Keller said in a market video for clients that Bitcoin is in a clear downtrend.
Keller said that the Bitcoin movement can be filled with noise and short term actions but its chart has transitioned from its uptrend phase towards a downtrend, citing the coin’s lower highs and lower lows that are breaking down through moving averages.
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