Bitcoin: From shock to the death cross

Market picture

Crypto market capitalisation is back above $2 trillion, up 1.3% over 24 hours. On Wednesday, the Crypto Fear and Greed Index retreated from extreme fear territory at 17 (the lowest in over two years) to 29.

The sharp declines in Bitcoin and Ethereum, sustained by the rumblings of falling stock indices since late July, accelerated the formation of a powerful bearish signal—the death cross—as the downward sloping 50-day MA accelerated its decline in recent days, promising to cross the 200-day MA in the next few days. Often, this signal triggers a new wave of declines, but now both coins look locally oversold as the financial markets lick their wounds after the recent sell-off.

However, even in case of a technical rebound, a return above the 200-day MA would be needed to prove that the bull market has returned. For Bitcoin, that level now stands at $61.5K, and for Ethereum, it is at $3200.

Meanwhile, Bitcoin's share of all cryptocurrencies continues to rise, standing at 55.8%, up from 53.7% a month ago and 48.7% a year ago. This is normal, as altcoins are obviously in weaker hands at this stage of the market.

News background

Abra warned of the risks of increased volatility in the cryptocurrency market, noting that the VIX fear index has risen to its highest level since the 2020 market collapse. Implied volatility (IV) will remain high until the macroeconomic situation calms down.

An analyst at Rekt Capital said that based on Bitcoin's historical fluctuations, the bearish trend could continue for another two months. In his opinion, BTC's bullish trend will resume as early as October, but don't expect a renewal of the historic high anytime soon.

Factor founder Peter Brandt drew parallels between BTC's recent collapse and the 2016 crash, which was followed by a bullish rally. If BTC follows the trajectory of past post-halving bull cycles, it will reach $130K-$150K by the end of August 2025.

UK hedge fund Capula Investment Management reported owning $464 million worth of bitcoin ETF shares. Capula is the fourth largest hedge fund in Europe, with $30 billion in assets under management.

Japanese Metaplanet will spend $59 million to buy Bitcoin. The decision was made amid volatility in the local stock market and a significant strengthening of the local currency.