What is a Death Cross?
A Death Cross occurs when the 50-day moving average crosses below the 200-day moving average, signaling potential bearish momentum.
The Death Cross is the bearish counterpart to the Golden Cross. It occurs when the 50-day moving average crosses below the 200-day moving average.
What It Signals
A Death Cross suggests: 1. Short-term momentum has turned bearish 2. A potential longer-term downtrend may be beginning 3. Risk management becomes crucial
Historical Context
Famous Death Crosses in Bitcoin: - March 2020 (COVID crash) - January 2022 (start of bear market)
However, not every Death Cross leads to extended declines. Sometimes price recovers quickly, making the signal a "false cross."
Trading the Death Cross
While many traders see it as a sell signal, contrarian traders sometimes view it as a buying opportunity since the signal is lagging and much of the decline may have already occurred.
💡 Key Points
- ✓Occurs when 50 MA crosses below 200 MA
- ✓Considered a major bearish signal
- ✓It's lagging - decline often already in progress
- ✓Can be false signal in choppy markets
- ✓Use for risk management, not panic selling
How to Use Death Cross
- 1Reduce position sizes when Death Cross forms
- 2Tighten stop-losses on existing positions
- 3Wait for confirmation before full exit
- 4Contrarians may look for oversold bounces
- 5Monitor volume for signal confirmation