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Bitcoin's price has been highly volatile this week despite the earlier crash from $70,000 to $49,000.
On the other hand, a "death cross" pattern is forming on the daily chart, which could be a sign of an incoming decline for BTC.
Benjamin Cowen states that the $62,000 price level must be broken if Bitcoin is to rally.
This means investors should watch out for what happens before placing further trade orders.
At the moment, there aren’t any clear indicators as to what might be going on with Bitcoin price.
As of Monday, 29 July, Bitcoin was testing the $70,000 zone, with “clear” indications of a breakout and retest of $73,800.
However, a week later, on 5 August, Bitcoin experienced one of its harshest crashes of the year and tested $49,000.
The cryptocurrency is back up to trading within the $60,000 and $62,000 range.
As it stands, an analyst believes that a “death cross” is looming for Bitcoin, and the $62,000 zone is a major determinant of what comes next.
Let's see who this analyst is, what they think of Bitcoin, and what might be incoming.
Death crosses happen when a short-term moving average (mostly the 50-day SMA) crosses below a long-term moving average (200-day SMA).
This crossover often means that further downside might be incoming for the asset, and for Bitcoin, we are seeing something like this about to happen, as shown below:
Bitcoin’s death cross
The chart above shows that the 50-day SMA and 200-day SMA are converging and are currently hovering around $61,998 and $61,882, respectively.
According to analyst Benjamin Cowen in a recent tweet, death crosses have always had mixed reactions to Bitcoin, with some turning out to be bullish.
For example, earlier in 2023, Bitcoin experienced a death cross.
However, instead of crashing, it started to rally, eventually using the 50-day SMA as a launchpad for the bulls.
We might see an unexpected rally on Bitcoin this time around as well.
However, Cowen mentions that Bitcoin's ability to avoid a crash would depend on its ability to break above the $62,000 resistance level.
The analyst opined that if Bitcoin can break above this resistance and establish it as a support level, we might see an escape from the Death Cross crash, just like we saw in 2023.
Conversely, if Bitcoin fails to clear this hurdle, we might see a return of the bearish pressure, especially if the global macroeconomy doesn't improve.
Bitcoin's price recently rebounded to $62,775 earlier this week before retracing its steps to between $60,000 and $61,000, where it now sits.
However, the response to future interest needs to be more encouraging. Regarding open interest, the futures market bulls have shown little enthusiasm despite Bitcoin's relative strength this week.
According to Julio Moreno, the head of research at CryptoQuant, the recent price bounce on Bitcoin was mostly due to short sellers covering their positions rather than any new surge in buying interest.
There is also the question of sell-side liquidity in Bitcoin's order books.
According to insights from Coinglass, investors hold around 12,000 Bitcoin between $61,200 and $62,500, which has formed a massive resistance wall.
So far, all of these analysts seem to agree that while Bitcoin continues to consolidate, the $62,000 resistance is the single most important price level on the cryptocurrency’s chart, and a break above is crucial.
If we see this break and close, Bitcoin will become poised for at least an $8,000 price increase to the next viable resistance at around $70,000.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.