The crypto markets can’t make up their minds lately. As soon as they gain momentum, things stall… or worse. Negative sentiment increased as Bitcoin traded below a ‘death cross’ chart pattern. This led to two important questions: Why is crypto crashing? And when will crypto rebound?
Answering the first question is simple. You can click the link above for details. But in the end, the crypto markets are reacting hastily to the headlines. And to be fair, there have been a lot of headlines to scare investors off lately. It is not surprising that some investors have sold their crypto holdings. It’s also not surprising that investors are asking, “When will crypto rebound?” Assuming that is the case.
First of all, the death knell has yet to be sounded for crypto. It’s not going away. And it will most certainly bounce back. It remains to be seen to what extent. But it is not impossible to make an educated guess. (More details below.)
Most governments don’t like cryptocurrencies. There are many examples of this. China does not want competition with its digital yuan. India is in a similar boat. And the Securities and Exchange Commission in the United States isn’t exactly crazy about them. But they’re not just going to go away. In fact, their popularity is only just starting to grow. We are in the midst of an accidental study that someone will be basing their crypto-university thesis on for years to come. And that alone should help crypto “hodlers” (“hodl” means “hold dear life”) rest assured. But if you need a little more confidence, it happens …
When will crypto rebound? When is not it?
Bitcoin’s 50-day moving average recently fell below its 200-day moving average. This is the “Death Cross” chart pattern that has alarmed many technical traders. And there are good reasons for their alarm. Historically, the cross of death has been a reliable indicator of a bear market. He foreshadowed the stock market crash of 1929. He also predicted the stock market crashes of 1974 and 2008. But crypto markets are not the same as traditional security markets.
In fact, Bitcoin has taken this route before. The last time a death cross pattern appeared was in March 2020. Within two months, Bitcoin completely turned and formed a “golden cross” chart pattern. It is the inversion of the pattern of the cross of death. And from there, Bitcoin’s valuation continued its historic ascent to its all-time high. And he might be ready to do the same in the coming months.
So when will crypto rebound? The key metric to watch here is Bitcoin’s 200-day moving average. The main reason the 50-day average fell below the 200-day average is that the 200-day average has been steadily rising. As long as this continues, there is not much to worry about. And that could indicate that another massive spike in value is coming … much like we saw in 2020.
If that turns out to be the case, the sharp drop in the crypto markets will be just another example of the well-documented volatility of this relatively new asset class … And ultimately, we will most likely see that the crackdown on the crypto in China will not have the long term effects on the markets it anticipates.
The end result on the crypto rebound
Bitcoin acts as the barometer for all crypto markets, which makes sense. It is not only the original cryptocurrency, but also by far the largest in terms of market capitalization. And it’s crypto that has garnered the most attention from investment banks like Morgan Stanley and hedge funds. So, declines in the value of Bitcoin lead to declines in the crypto market as a whole. And for the most part, it also works backwards. A rising tide in Bitcoin lifts all crypto boats.
If you are wondering “When will crypto rebound?” Just keep a close eye on that 200-day moving average. If it starts to fade, it could be a sign of bad things to come. But if it continues to rise as analysts predict, the crypto markets as a whole could experience a heckuva boom.
When Bitcoin started its last run in 2020, it was around $ 6,000 a coin. And it climbed to $ 63,000. Now it is trading at over $ 30,000. If history repeats itself, many crypto investors could be on the verge of getting very rich. In other words, we may already be in the midst of a major rebound.
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