Bitcoin is set to form an ominous technical indicator commonly known as the “Death Cross” later this week.

This super bearish indicator occurs when the 50-day simple moving average (SMA) slips below the 200-day SMA, indicating a decisive shift in market sentiment from bullish to bearish.

A death cross will form on both the BTC and ETH charts | The source: Bloomberg

BTC is currently trading at $ 42,785 after falling below $ 40,000 on Monday.

However, analysts claim that the scary sounding Death Cross is often a lagging indicator as it reflects the past performance of the cryptocurrency.

Mati Greenspan, founder of Quantum Economics, commented that virtually all previous Death Crosses have turned into buying opportunities:

“Some say it’s bearish, but for Bitcoin, almost all previous Death Crosses or gold crosses have proven to be good buying opportunities.”

Bitcoin formed a death cross in June, just days before it hit a local low of around $ 28,500. The top cryptocurrency finally gained momentum again in August and formed a golden cross in mid-September (50-day SMA over 200-day SMA).

However, a possible bearish scenario should not be completely ruled out.

After Bitcoin formed a death cross in 2018, the price corrected 55%. It took over a year for the golden cross to appear. The same scenario played out during the 2014-2015 bear market. Historically, if the market does not recover within 3 months of the Death Cross, Bitcoin tends to lose more.

The source: Venture founder

Smart money will “buy fear”

Well-known analyst Nicholas Merten said Bitcoin will keep falling, but smart money will flow at a lower price and make a big rally. In the new update video, the host of the DataDash channel to speak that:

“Bitcoin is going through a unique cycle, a market driven by credit and leverage.”

However, the analyst offers some bullish predictions given volatile market conditions.

“And if you want to comfort yourself a little when you see Bitcoin drop again, I think it’s very real that BTC market cap will drop to around $ 600-650 billion.”

Currently, the market capitalization of Bitcoin is $ 808 billion. So a drop to $ 600 billion would be 25%, but Merten says this correction will ultimately benefit the market.

“That will allow BTC to hit higher ground along a rising support line above previous resistance in the 2017 cycle and / or we may see it jump into the $ 650-700 billion area sooner.”

Source: DataDash

According to Merten, smart money buyers will see the upcoming BTC boom as a big buy signal.

“Why so? Because that would be a sign that the market is not entering a bear market. In fact, smart money will appear and actively buy when fear rages, which will drive prices so high in 2022. The chances are good.”

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