Crypto prices tumble as experts warn about impending ‘death cross’
- A death cross is when the short-term average price of a coin drops below its long-term average.
- A death cross could lead to the failure of most of the world’s NFT platforms.
- The industry usually measures death cross in the 50-day and 200-day averages.
AdvertisementCryptocurrency prices have taken some sharp dips over the past seven days, amid continued crackdowns in China and warning notes from leading voices in the community.
According to Coinmarketcap, the prices of some of the top cryptocurrencies dropped by well over 10% over the past seven days. As of 1pm IST on June 21, Bitcoin had dropped by about 16.85%, while Ethereum, Dogecoin and Litecoin dropped by 20.20%, 21.71% and 18.78%, respectively.
One of the biggest warnings came from Fred Ehrsam, co-founder of the world’s largest crypto exchange, Coinbase. He has issued a price warning about an approaching “death cross”, a phenomenon where the short term average price of a stock drops below the long term average. It’s usually measured by comparing 50-day and 200-day averages.
Ehrsam warned investors that this could mean that most crypto assets “won’t work” and 90 percent of all non-fungible tokens (NFTs) will fail in three to five years.
Not just Ehrsam, over the weekend, the man who inspired the movie ‘The Big Short’ also cautioned that casual investors buying cryptocurrencies — and meme stocks like Gamestop, AMC, etc — are signing up for the “mother of all crashes” in future.
"All hype/speculation is doing, is drawing in retail before the mother of all crashes. #FOMO Parabolas don’t resolve sideways; When crypto falls from trillions, or meme stocks fall from tens of billions, Main Street losses will approach the size of countries. History ain’t changed,” Burry said in a tweet late last week.
That said, while Burry and Ehsram’s words certainly hold weight among investors, it seems the crypto trading community may also be at odds about which way to go.
When popular crypto influencer Plan B tweeted about the death cross, some pointed out that this isn’t the first time the industry has witnessed the phenomenon. “There have been 6 past death crosses in bitcoin's lifetime. 4 have resulted in enormous downside. The two that didn't lead to a downtrend were towards the end of a bear market, not after a full blown bull run. Check your bias wisely,” wrote one user in reply to Plan B’s tweet.
Bitcoin’s fall over last one week
While the tweet in support of the industry is clearly from a fan, it may have a point. Ups and downs in the crypto industry aren’t new, and for what it’s worth, this drop pales in comparison to the nearly 50% drop the top currencies registered during late April-early May.
Industry experts have also been expecting a market correction recently, this could just be the market returning to a normal of sorts, after nearly a year-long bull run.
“For those who are aggressive traders, any break of 30k should lead down to 20-25k and that should be a better area to consider buying dips for a bounce,” Mark Newton, founder of Newton Advisors told Coindesk.
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