Bitcoin is dangerously close to another mammoth correction after the daily 50 exponential moving average (EMA) crossed 200 EMA to the downside.
In Bitcoin’s 11 year history there has been a handful of exponential moving average death crosses, with each and everyone one of them resulting in a 25% larger plunge.
The crucial cross comes after a desperate week of price action that saw Bitcoin fall all the way to $3,600 despite trading at $10,500 less than one month ago.
The sell-off has been reflected across all global markets with the s&p500 and the FTSE100 suffering corrections that echoed the 2008 financial crisis.
The cause of the reversal has undoubtedly been the spread of coronavirus, which has ravaged much of Europe and North America after originating in Wuhan, China.
As cases and mortality rate continues to rise so will the likelihood of significant economic downturn on a global scale.
Despite bitcoin often being touted as a safe haven, its performance over the past fortnight has dispelled those theories, which will have a notably adverse effect if the stock market continues to tick down over the coming months.
From a technical perspective, Bitcoin needs to break back above the $5,900 level of resistance in order to regain a bullish posture, although it seems more likely for a breakdown in price, which could result in Bitcoin falling to as low as $3,600 and $3,150.
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In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.
The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On January 3 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.
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As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.