One crypto analyst pointed out how Bitcoin has recently formed a technical crossover ahead of past bearish shifts.
Bitcoin experiences a death cross between the 21-day and 50-day SMAs
In a new post on X, analyst Ali Martinez published Bitcoin’s daily price chart, showing the crossover between the two simple moving averages (SMAs) that Bitcoin recently passed.
SMA is a statistical tool that averages quantities over a specific period of time and, as the name suggests, updates accordingly. This tool is useful for studying long-term trends as it eliminates short-term fluctuations and smooths the graph.
Although the SMA can be obtained for any time period, two specific time periods are relevant in the context of the current topic: 21 days and 50 days. Below is a graph posted by Martinez showing the trend of Bitcoin’s SMA over the past 10 years.
From the graph, we can see that Bitcoin’s daily price has recently fallen below the 21-day SMA and below the 50-day SMA. In the past, this crossover has tended to act as a “death cross” for cryptocurrencies, causing prices to plummet after the signal appears.
In the chart, analysts highlight past instances of this death cross. After the crossover, the assets appear to have experienced drawdowns ranging from 54% to 69%.
The most recent crossover occurred in 2022, when prices fell about 66% to the bottom of a bear market. It remains to be seen whether the 21-day SMA falling below the 50-day SMA will prove bearish for Bitcoin this time, given historical patterns.
In a scenario where an asset continues to experience bearish momentum, it may be at risk of falling below an on-chain level known as the realized price-to-utilization ratio. This level represents the ratio between two on-chain metrics: realized price and vigor.
The former of these tracks the cost base of an average investor or address on the Bitcoin blockchain, while the latter encapsulates the spending/HODL behavior of long-term investors.
As Martinez highlighted in another X post, Bitcoin has recently been trading close to its realized price-to-occupancy ratio.
As shown in the chart above, Bitcoin’s realized price-to-occupancy ratio is currently around $87,500. BTC briefly fell below this mark during Sunday’s selloff, but Bitcoin has since recovered above this mark.
“The last time Bitcoin $BTC fell below the realized price-to-survival ratio, Bitcoin moved towards the realized price,” the analyst noted. The realized price is now $56,000.
BTC price
At the time of writing, Bitcoin is hovering around $89,500, up 2% over the past seven days.