Bitcoin vs. the Death Cross

Andy Snyder|June 29, 2021

A Note From Andy: I want to share with you a piece I wrote for my friends at The Oxford Club last Friday. I’ve been writing a special crypto-focused column for them for a couple of months and thought you might enjoy this one.

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Crypto investors should not worry about Bitcoin’s “death cross.”

Here’s why…

Every other time this “ominous” formation has appeared in a chart, savvy buyers have gotten rich.

All week, my inbox has been filling up with folks asking my opinion on Bitcoin’s latest move. If you follow such things, you likely know the world’s leading crypto just created an interesting chart.

It’s one of the simplest formations around.

Bitcoin’s 50-day moving average dipped below its 200-day moving average – forming the infamous “death cross.”

In stocks, it’s historically been a sign of trouble (although, even that’s debatable, as the formation never popped up last year amid one of the fiercest sell-offs ever).

But the crypto market is not the stock market. Far from it.

Diagnosing one with the tools of the other is like giving human medicine to a dog.

Viagra won’t fix the neutered.

Size Matters

To start, the crypto market is far smaller and far less liquid.

The market cap of just the U.S. stock market is $50 trillion. The size of the entire global crypto market is a mere $1.2 trillion.

Apple (AAPL) is twice as big.

That’s why headlines matter, tweets move prices and a single story out of China can sway prices significantly.

For speculators, it’s what makes the crypto market so enticing. The moves can be spectacular.

In fact, just days after Bitcoin put the cross on its chart, prices soared more than 18%. Just a few bucks more and the charts would have officially reached bull-market territory.

That would never happen in stocks – at least, we hope not.

But the last two times Bitcoin saw a death cross, big moves higher were exactly what happened.

Each crossover marked the bottom of the dip. Investors who used it as a buying opportunity were rewarded handsomely.

The last technical warning came in March 2020… just before prices screamed to all-time highs. Before that, it came in March of 2018 – after the lows had already been hit.

Watch Volume… Not a Chart

Like I’ve said many times, the key to Bitcoin – and all cryptos – isn’t the charts. It’s the buying pressure and the amount of money that’s flowing into the space.

With a market this small, that means everything.

It’s no surprise that tracking money paints a much different picture.

Get this…

The so-called whales who hold 1,000 or more Bitcoin now hold a total of 7.9 million tokens. It’s the largest amount they’ve held since mid-March – again, right before the digital currency roared to all-time highs.

On the other side of the ledger, though, retail investors (e.g. the Reddit crowd) are selling. The folks with 10 coins or less own their smallest amount of the year – just 2.65 million coins between them.

It’s no surprise that the retail crowd is selling off. It always does… and almost always at the wrong time.

Most of these folks never truly understood the asset they were buying.

But the big boys – the whales – do. And they aren’t selling. They’re buying more.

They know we’ve been here before. They know crypto can dip 30%… 40%… and even 60%. But they also know that the future looks very different from today.

My advice has not changed.

Invest in coins that represent a fresh form of technology. That means DeFi (decentralized finance) coins. Tokens that help run the Internet of Things. Coins that make markets cheaper, faster and easier to navigate.

Their promise is not reflected in the charts.

Today’s charts show only the effect of tweets, headlines and sentiment on a nascent market.

Don’t be fooled.

P.S. One of our favorite cryptos is a screaming buy right now. It may not be this cheap again this year. It’s got great tech behind it… and it’s chart has rarely been better. Click here for all the details.