Bitcoin, the leader of the cryptocurrency pack, may have suffered a death blow to its quest for credibility. The cryptocurrency saw massive selling as its price fell by more than 10 percent.
The initial trigger was China further cracking down on Bitcoin mining and economic activity. But what’s more alarming is a dangerous phenomenon that is in the offing for bitcoin investors - the death cross.
What’s death cross?
The crypto-market leader’s value is down by 20 percent in less than a week. From its all-time high of $65,000 in April, it is now less than half that price.
Now, the black weekend has forced Bitcoin to trigger a technical sell signal, indicating more downside ahead.
As per experts, Bitcoin has experienced a death cross. This technical phenomenon occurs when the the 50-day moving average of a crypto stock falls below the 200-day average which predicts long-term movement.
Technical analysts and traders hold the signal vital. After Bitcoin suffered the death cross on Saturday, it lost 14 percent in value by Monday morning.
From $35,484.70 on Saturday, Bitcoin closed 31,608.10 on Monday.
Now, with the cryptocurrency sliding below the $30,000 mark and China’s crackdown worsening, analysts expect a more downward movement on the horizon.
Bitcoin to shed more value in the days ahead
The Chinese government is coming down hard on Bitcoin miners. The Sichuan province, China’s second largest crypto mining region, ordered 26 of the biggest miners to suspend their operations.
Chinese officials have also reiterated the ban on crypto service offerings to banks and fintech companies.
China's state media outlet reported that the country is set to shutdown over 90 percent of its bitcoin mining operations from Monday. While data on mining capacity by countries is scarce, China’s bitcoin miners accounted for around 65 percent of the global production in 2020.
What Bitcoin is experiencing in China could trigger similar confrontations in other countries.
Furthermore, the loss in mining capacity could not have come at a worse time for Bitcoin. Environmental concens and high energy usage has already made finding new locations for factories hard for Bitcoin miners.
What’s ahead for those with money in Bitcoin?
All next-big-asset investment bubbles are bound to burst eventually. It happened with dotcom as well as real estate.
Bitcoin’s history suggests significant slide in near future. If the price drops below $30,000, investor sentiment will be massively hit. That could potentially trigger another week of frantic selling.
If you think the low price on offer currently is a good time to invest in the cryptocurrency, experts advise caution.
For those sitting on Bitcoin assets, it is the time to be patient. Despite all the meltdown of 2021, Bitcoin has still put on 10 percent value this year. It has grown more than 200 percent in the last year, mirroring the 2017 rise to global prominence.
Nevertheless, with the death cross triggered and its fight for acceptance at tipping point, its make or break time for Bitcoin.
