‘On-Chain Death Cross’: Bitcoin Flashing Pattern That’s Historically Preceded Bearish Trend, Warns Glassnode
Bitcoin (BTC) may be on the verge of entering a bearish trend based on a historic market pattern signal, according to digital asset analytics firm Glassnode.
Glassnode says that the one-month and six-month volume-weighted average price (VWAP) metrics are signaling that Bitcoin may enter a months-long downtrend.
VWAP represents the average traded price of an asset over a specific period, taking into account both volume and price.
“An on-chain analog to the ‘death cross’ has emerged. The 30-day volume-weighted price of BTC has crossed below the 180-day, signaling weakening momentum. Historically, this pattern preceded three to six months of bearish trends.”
A traditional death cross in technical analysis occurs when the 50-day moving average (MA) drops below the 200-day MA and is used to identify a weakening market.
Glassnode further explains its methodology in a blog post, suggesting it provides a relatively better measurement of market sentiment than the traditional death cross method.
“To bring this [death cross] concept into the on-chain domain, we construct an analog using on-chain volume-weighted prices for coins moved in the last one month compared to the last six months. This method directly reflects market sentiment by factoring in both when and how much capital actually moves on-chain.”
Bitcoin is trading for $82,040 at time of writing, down 5.4% in the last 24 hours.
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