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The potential formation of a death cross, an indicator that hints at a possible bearish reversal when the short-term moving average crosses below the long-term moving average, puts Bitcoin at a critical level.
Bitcoin's 50-day and 200-day moving averages are gradually converging, as shown in the chart, raising questions about the asset's potential price action. Since it usually indicates impending downward pressure, the death cross often causes traders to exercise increased caution. This pattern indicates that Bitcoin may be about to enter a prolonged bear market.
However, it is important to consider the broader market environment, as death crosses do not always result in significant price drops. At the moment, the price Bitcoin fluctuates around $56,000. It will be important to monitor several key price levels in the near future.
To prevent further losses, the asset must maintain the $58,000 support level as the first target. This is the next important support level, and if BTC breaks below, it will regain stability at $54,000. For Bitcoin to continue its more bullish trajectory, it must rise above the resistance at $60,000.
Connected
On-chain data also shows mixed signals. On-chain metrics such as net network growth and large transactions remain neutral, indicating that there is no clear trend in the current state of Bitcoin. In contrast, exchange signals are mostly neutral or bullish. The fact that investors are not currently making serious investments in the asset, as indicated by negative net exchange flows, may indicate that the market is feeling cautious.
With neutral data on the network and the potential for a death cross, Bitcoin's immediate price action is unpredictable. While there may be short-term downside risk associated with a death cross, Bitcoin has a history of resilience and has recovered from similar circumstances in the past.