Data shows three popular Bitcoin momentum indicators recently formed a death cross pattern. Here’s what typically follows this formation.
Bitcoin momentum indicators have recently seen bearish crossovers
In the up-to-date CryptoQuant Quicktake fastinganalyst discussed the latest trend in three Bitcoin-related momentum indicators. Momentum indicators here refer to a combination of some crucial moving averages (MAs) related to the cryptocurrency.
The first one is the “Active Address Momentum”, which includes the 30-day and 365-day MA of the daily unique number of dynamic BTC addresses. An address is called “active” when it is making some kind of transaction on the network, regardless of whether it is a receiver or sender.
The number of dynamic addresses may be the same as the number of users visiting the network, so this metric tells us what the blockchain activity is like right now.
Below is a chart provided by a quantitative analyst that shows the trend of the 30-day and 365-day moving averages of dynamic addresses over the past few years.
As shown in the chart above, the monthly average of dynamic addresses fell below the yearly average shortly after the asset rose to a up-to-date all-time high (ATH) and has remained below that level since then.
This crossover means that activity on the BTC blockchain is falling. Generally, user interest fuels growth, so an escalate in dynamic addresses is needed to maintain greater stability.
As investors begin to pay less attention to the cryptocurrency, conditions may no longer be right for a bull run. The chart shows that this kind of crossover also occurred at the end of the bull run in the first half of 2021, although the rally in the second half occurred independently.
The second indicator of dynamics is the eminent market value to realized value ratio (MVRV), which tells us whether investors are making profits or losses.
As the chart shows, the MVRV indicator also had its monthly cross below the yearly one, suggesting that investors’ profits are shrinking. This pattern has historically served as a death cross, with BTC moving towards a bearish phase after it. The same cross also appeared just before the start of the bear market in 2022.
Finally, we have a bearish intersection of the 50-day and 200-day moving averages of Bitcoin price.
Given all of these negative patterns across various Bitcoin metrics, the cryptocurrency could be headed for at least a short-term bear market.
BTC price
Bitcoin has recently been going through a crisis, with its price falling to $56,500.
