Bitcoin Confirms Death Cross as Bear Market Signals Intensify

Bitcoin has entered troubling territory after confirming a death cross pattern on its daily chart, marking a technical milestone that historically signals extended price declines. The cryptocurrency fell to $80,000 on Friday, reaching its lowest level in six months and raising concerns among traders about the strength of the current market cycle.

The death cross formation occurred when Bitcoin's 50-day simple moving average crossed below its 200-day simple moving average on November 16. This was the first such occurrence since January 2024. The pattern has preceded substantial drawdowns in previous cycles, with Bitcoin experiencing drops ranging from 64% to 71% following similar formations.

Market analysts are closely monitoring the situation. Crypto analyst Mister Crypto pointed out that every Bitcoin cycle has concluded with a death cross, questioning whether the current environment would prove different from historical patterns.

Key Support Levels Broken

Bitcoin's decline has breached multiple critical support levels that traders monitor for trend changes. The cryptocurrency closed below its 50-week moving average on Sunday, a development that analyst Rekt Capital identified as particularly significant for maintaining bullish market structure.

BTC lower lows. Source: Rekt Capital

The price action worsened as Bitcoin dropped beneath the 100-week moving average, reaching a six-month low of $80,500. Rekt Capital noted that bullish market structures become invalidated when the macro trend shifts, suggesting that Bitcoin needs to reclaim these levels promptly to restore positive momentum.

The convergence of technical indicators paints a bearish picture. Bitcoin's SuperTrend indicator recently sent a bearish signal on the weekly chart, an event that has historically marked the beginning of bear markets. This adds weight to concerns that the cryptocurrency may face extended downward pressure in the coming months.

Onchain data reveals the extent of selling pressure currently hitting Bitcoin markets. Realized losses have surged above $800 million on a seven-day rolling basis, reaching levels not observed since the FTX exchange collapse in November 2022.

Glassnode data shows that short-term holders are responsible for the majority of these losses. The firm characterized the situation as a meaningful washout, with marginal traders unwinding their positions as the drawdown deepens. Short-term holders typically include investors who acquired Bitcoin within the past 155 days.

CryptoQuant analyst IT Tech emphasized that short-term selling often indicates a local bottom if prices quickly recover above the cost basis. However, failure to reclaim these levels has historically confirmed deeper bearish trends or the onset of bear markets.

Bitcoin STH realized profit and loss. Source: CryptoQuant

The scale and speed of current losses reflect significant stress in the market. Previous death cross formations triggered severe declines. In January 2022, Bitcoin dropped 64% following the pattern, bottoming at $15,500 amid the FTX crisis. Earlier cycles saw even steeper falls, with March 2018 and September 2014 recording 67% and 71% declines, respectively.

Market Outlook Remains Uncertain

At the time of writing, Bitcoin is trading at $83,700, but analysts project further downside potential. Some market observers suggest the cryptocurrency could test its April bottom of $74,500 if selling pressure continues.

Bitcoin price chart. Source: CoinMarketCap

The question facing traders is whether dip buyers will emerge with sufficient strength to reverse the trend. Bitcoin has historically recovered from death crosses, though the path often involves significant volatility and extended consolidation periods.