What Is Death Cross?

Moving averages show the average price over a given period. The short-term average falling below the long-term one means recent prices have weakened relative to the long-term trend. Technical analysts read this crossover as a sign that a short-term decline may turn into a longer-term downtrend. The opposite case, in which the short-term average crosses above the long-term one from below, is called a golden cross.

The death cross is often a news topic in the media for Bitcoin and other cryptocurrencies. However, because moving averages are calculated from past prices, they are lagging indicators; the crossover often happens after the price has already fallen significantly. In some cases the price recovers right after the crossover and the signal turns out to be misleading.

For this reason, the death cross alone is not considered a sufficient indicator for a trading decision. Analysts generally evaluate it together with other tools such as trading volume, support and resistance levels, RSI, or MACD. The outcomes of crossovers that form on different timeframes and with different types of averages (simple or exponential) can also vary.