Bitcoin Faces Bearish Trend as On-Chain Death Cross Emerges

Bitcoin (BTC) may be on the brink of a bearish trend, according to digital asset analytics firm Glassnode. The firm has identified a pattern known as the "on-chain death cross," which has historically preceded bearish trends lasting three to six months. This pattern is characterized by the 30-day volume-weighted average price (VWAP) of BTC crossing below the 180-day VWAP, indicating weakening momentum in the market.

The VWAP metric is a crucial indicator in this context, as it represents the average traded price of an asset over a specific period, taking into account both volume and price. This method provides a more accurate reflection of market sentiment compared to traditional technical analysis methods, such as the death cross, which involves the 50-day moving average (MA) dropping below the 200-day MA.

Glassnode's methodology involves constructing an on-chain analog to the traditional death cross by comparing the volume-weighted prices of coins moved in the last month to those moved in the last six months. This approach directly reflects market sentiment by factoring in both the timing and the amount of capital moving on-chain. According to Glassnode, this method provides a relatively better measurement of market sentiment than the traditional death cross method.

The current market conditions, with Bitcoin trading at $82,040 and experiencing a 5.4% decline in the last 24 hours, align with the historical patterns identified by Glassnode. This suggests that investors should be cautious and prepared for a potential prolonged bearish trend. However, it is important to note that market conditions can change rapidly, and this analysis is based on historical data and current trends.

Investors are advised to conduct their own due diligence and consider the risks associated with high-risk investments in Bitcoin and other digital assets. The information provided by Glassnode is intended to offer insights into market trends and should not be considered investment advice.