What is the Cross of Death and why is it Important in Crypto Investing?

What is the Cross of Death and why is it Important in Crypto Investing?

This decline means a resounding drop of more than 50% since its price reached an all-time high. It is important because the drop triggered a phenomenon known as the “Cross of Death”. It dragged down the entire cryptocurrency market. Investors use this signal when doing technical analysis that allows them to predict the possible behavior of the digital currency. 

The crossover of death forms when the average price of the last 50 days falls below the average price of the last 200 days. The crossover is a pattern of behavior that everyone who does technical analysis sees and therefore it gains importance. It’s like a self-fulfilling prophecy that makes people prefer to invest a portion of their bitcoins in a less risky asset.

It is important to take into account that technical analysis does not only include one variable, so when it comes to anticipating the price of the currency, experts will use the cross as one more element in their toolbox. The Cross of Death is not infallible, nor are the mathematical calculations that try to anticipate the cryptocurrency market.

The China factor

The currency crash came after the People’s Bank of China stated the prohibition of the country’s banks and payment platforms from conducting transactions and engaging in business activities related to cryptocurrency.

The argument of the bank is that the measure tries to combat the speculation of bitcoin and other digital currencies and ensures the safety of citizens and maintains financial security and stability.

Last week the Asian giant ordered the closure of several cryptocurrency mining centers. Mining in China fuels almost 80% of the global trade in cryptocurrencies despite the ban since 2017 on trading them in the country and the closure of this activity in several provinces.

In conclusion, the restrictions that the government has imposed this year are concerning the financial world. What China has done is to try to hit cryptocurrencies hard and seek not to accept them as a means of payment. China is against bitcoin and we will see what the consequences will be.

Cross of Death
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