Bitcoin "Death Cross" arrives next week! But historical data shows: every time it appears, it's the bottom.

Bitcoin's 50-week moving average is about to fall below the 100-week moving average, forming the fourth "death cross" in history. Historical data shows that this lagging indicator often occurs near bottoms, implying limited downside potential in the market.

The cryptocurrency market has recently been weak, and many investors' biggest concern is "how much further can Bitcoin fall?" Looking at a historically highly accurate "contrarian indicator," the answer might be: the downside is already quite limited.

Although recent market sentiment is dominated by risk aversion, with concerns over the Federal Reserve's policy direction, rising U.S. Treasury yields, and Strategy-related risks continuing to dampen confidence, a technical signal that appears somewhat bearish but has repeatedly indicated market bottoms is quietly emerging.

"Death Cross"

Analysts point out that Bitcoin's 50-week SMA (50-week Simple Moving Average) is about to fall below the 100-week SMA (100-week Simple Moving Average). Shorter-term moving averages are generally considered to better reflect recent market sentiment, so when the 50-week SMA crosses below the 100-week SMA, it forms the so-called "death cross." Based on current trends, it could happen as soon as next week.

Image source: TradingView

Based on past experience, Bitcoin has only experienced the "death cross" three times, and each time it occurred near the market bottom, not only signaling the end of the downtrend but also marking the start of a multi-year bullish rally. Therefore, the upcoming cross signal might actually mean that Bitcoin is not far from the bottom of this bear market.

Of course, some market participants might question whether drawing conclusions from just three past instances is too few. However, the reason why the death cross has become a reliable "contrarian indicator" is closely related to the nature of ultra-long-term moving averages as "lagging indicators."

Carefully analyzing the messages conveyed by these moving averages: they represent Bitcoin's average price over the past 50 and 100 weeks. In other words, they reflect "already occurred" market conditions, and the imminent death cross essentially mirrors Bitcoin's brutal decline from the October 12 high of $126k to nearly $60k. Therefore, when the death cross actually appears, the market has often already completed most of its correction.

When this ultra-long-term death cross finally forms, it usually also indicates that market bubbles have been thoroughly deflated, short-term speculative funds have exited, and the panic selling that investors fear most has subsided. Combining these signals, seasoned traders are very likely to see the death cross as an excellent buying opportunity.

Macroeconomic Variables Still Abound, Do Not Go All-In Blindly

However, no technical indicator can guarantee future trends. Bitcoin's price will ultimately be influenced by macroeconomic conditions and capital flows, including: changes in U.S. Treasury yields, capital flows into Bitcoin spot ETFs, the pace of Strategy's increased Bitcoin holdings, and the Federal Reserve's monetary policy direction. These factors remain the absolute key to determining Bitcoin's next major move.

• This article is reprinted with permission from: 《Block Beast》
• Original title: "Bitcoin 'Death Cross' Coming Next Week! But Historical Data Shows: Every Time It Appears, It’s a Bottom"
• Original author: Block Sister Mel