Bitcoin is approaching a market pattern known as a “death cross” after experiencing one of the worst price slides in recent years.
The cryptocurrency dipped below $40,000 on Monday following seven straight days of losses, marking the longest losing streak since August 2019 and the worst start to a year since 2012.
Bitcoin has since recovered slightly but market analysts are now watching to see if it can hold and remain above the dreaded death cross.
The ominous-sounding term refers to when bitcoin’s 50-day moving average crosses its 200-day moving average, which has historically indicated the end to a bull market. Notable death cross events in traditional markets include the Wall Street Crash of 1929 and the 2008 Financial Crisis.
Bitcoin is currently trading at its lowest price level since September 2021, when the opposite of the death cross occurred, with the appearance of a golden cross.
The event preceded a strong bull run that saw BTC hit an all-time high above $68,000 in November.
Cryptocurrency analysts and traders are also watching to see whether bitcoin can hold above the $40,000 mark, which represented a key level of support throughout last year.
Should bitcoin’s price fall below the psychological barrier, analysts warn that an even steeper sell-off could take place.
Crypto traders have been cashing in their holdings in recent days, with data from Coinglass revealing that more than $340 million of cryptocurrency was liquidated on Monday.
The largest liquidation was on the exchange Bitmex, which saw one trader move $5.96 million worth of cryptocurrency into fiat, however even larger amounts were moved onto exchanges ahead of more potential liquidations.
One anonymous bitcoin wallet transferred more than $40 million in BTC onto Coinbase at the start of the week.
The broader crypto market has largely mirrored bitcoin’s downward trajectory, with Ethereum (ETH), Binance Coin (BNB) and Solana (SOL) all experiencing significant losses at the start of 2022.
The downturn has been driven by numerous factors, including expectations that the US Federal Reserve will raise interest rates at least four times this year, as well as a crackdown on bitcoin mining in Kazakhstan.
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