Explainer: ‘Death cross’ chart formation adds another worry to bitcoin outlook

A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14, 2021. REUTERS/Edgar Su/Illustration/File Photo

June 21 (Reuters) - For technical analysts watching bitcoin, an important and potentially bearish chart formation just happened in the cryptocurrency: A “death cross.”

Technical analysts use the term "death cross" to describe when a short-term average trendline crosses below a long-term average trendline -- signalling a change in price momentum. The 50-and 200-day combination often attracts the most attention.

Bitcoin, the world's biggest cryptocurrency, has long experienced volatility. It has lost over 20% in the last six days and is down by half from its April peak of almost $65,000. Market players are citing jitters over China's expanding crackdown on bitcoin mining in thin liquidity for the losses. read more

Crucial for bitcoin will be its ability to hold above its May 19 low of $30,066, which is an initial target for bears. Breaking below that level would reinforce the negative signal of the death cross.

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