A Bitcoin death cross pattern means crypto is in for a rough few months, possibly even more of a reversal than anyone thought.

Bitcoin (BTC) lost half its value since reaching an all-time high of $63,000 in January 2021. Cryptocurrency die-hards will tell you they’ve been here before. If you’ve watched BTC over the last six months, it might seem like just another day.

But the Bitcoin death cross could be different.

In the last year, BTC has surfed a wave of Elon Musk tweets, Robinhood speculation, and even downright gambling – all short-term factors pushing the price higher. But, as Chief Investment Officer of Passport Capital John Burbank says, “Price is a liar.”

Really, there’s a difference between price and value. Despite the latest Bitcoin chatter, it’s been quietly adopted by institutions around the world. And that’s the only thing worth your attention.

So, then why would the Bitcoin death cross concern you?

Well, if you know the fundamentals of an investment, technical indicators like this help give you an idea of how long it will take to be realized by the public.

In other words, if Bitcoin is destined for failure, a death cross can mean failure is imminent.

If it’s destined to be a universally accepted form of exchange and store of value, the death cross can tell you it’s taking longer than expected.

Let’s first talk about what a death cross is. Then, we will get into what it means for the future of Bitcoin.

What Is the Bitcoin Death Cross?

A death cross pattern is when the 50-day moving average of an investment falls below the 200-day moving average. Basically, it’s the average price of the investment each day, based on the averages of the previous 50 or 200 days.

When the moving average for the short term (50-days) sinks below the value of the long term (200 days), it indicates that a dip in price could be more than just a blip on the radar, and the price is trending lower.

Today, the Bitcoin price is potentially losing much more of what investors thought represented “consolidation” in its price. A drop past $30,000 will confirm this.

So, in short, passing the death cross usually means a bear market for the security.

We should remember that Bitcoin has had previous death crosses. And in those instances, everything went as expected. In 2018, a death cross was followed by a decline of 70%. In 2019, the death cross was followed by a decline of 47%.

Another death cross happened in March 2020 amid the COVID-19 pandemic. Of course, the crypto market sailed in the following months due to unique circumstances. People were holed up in their homes with more time to spend on their mobile devices. In addition to new Robinhood day traders, the pandemic brought people into stocks and crypto who might have otherwise spent their money at a casino.

With everything opening up again, many “gamblers” will leave crypto. And with the crypto market suffering regulatory strife, more speculators will rush out the door.

Stephen Kelso of ITI Capital said that the Bitcoin price “could soon drop to $20,000” following this latest death cross.

If that happens, it will be primarily for this reason…

How Did the Bitcoin Price Get Here?

Right now, the Bitcoin price is responding to a wave of pessimism about it and the overall cryptocurrency market.

Abroad, China wants to crack down on crypto mining, Chinese authorities in the province of Sichuan have ordered Bitcoin mining projects to close. According to the University of Cambridge, 65% of global Bitcoin production came from China, with Sichuan as the nation’s the second-biggest producer.

Now, China’s State Council vows it will take a tougher stance on mining and trading cryptos. Bitcoin liquidity will no doubt take a hit from losing the world’s most heavily populated country.

China’s policy is prompting Chinese Bitcoin-mining companies to offload all of their Bitcoin into the market and devaluing the price.

People also worry that China’s position as an economic powerhouse could influence other governments and institutions to take similar stances on crypto trading. This can sink the price as well.

Meanwhile, in the United States, regulators criticize Bitcoin for the amount of energy it takes to mine. Elizabeth Warren has even gone as far as saying that cryptocurrency creates “opportunities to scam investors, assist criminals, and worsen the climate crisis.”

Even without national governments fighting Bitcoin, you have Elon Musk playing his social media followers like fiddles.

Ultimately, world leaders from governments to the flashiest corporations don’t appear fond of Bitcoin. But not all is what it seems…

Where Will the Bitcoin Price Go Next?

Cryptocurrency has been volatile since its inception.

From 2015 to 2017, Bitcoin soared more than 6,000% from around $300 to above $19,000. It spent the next year hurtling back to the $3,000 level, hitting near $3,100 in December 2018. Since then, it’s risen about 2,000% to an all–time high of $63,000.

We’re staring down the barrel of another crash right now. Bitcoin has lost around half its value from the all-time high.

The coin falling below the $30,000 mark means it loses a lot of the support that had previously looked like consolidation. It could mean the number of long-term holders was overestimated and the market was packed with speculators.

But let’s go back to that distinction we made between price and value.

Right now, two things drive the fear of Bitcoin collapsing (and, therefore, the price): government regulation and energy consumption.

These narratives are somewhat intertwined, but if Bitcoin can overcome them, the coin’s real value far outweighs its current price. That also means whatever bear market comes over the next few months, it’s just another brief dry season for crypto investors.

And good news for Bitcoin holders: There is still a case against both the government regulation and sustainability arguments.

The energy problem comes from a massive misconception about Bitcoin. The idea that Bitcoin’s proof-of-work mechanism uses more energy than many small nations is true. But it ignores the fact that today’s financial systems, without Bitcoin, already use far more energy than Bitcoin mining.

For example, think about how much energy it takes to run a company like Morgan Stanley (NYSE: MS). These corporations run massive international computer systems, far more sophisticated than Bitcoin. More than that, how much fossil fuel does it take to fly their executives to Switzerland and back?

Fun fact: Bitcoin even uses less energy than traditional gold mining. And it’s supposed to be “digital gold.”

It’s decentralized gold. And that brings us to the question of government regulation.

Decentralization is something Bitcoin does better than most cryptocurrencies. It is gradually being adopted by institutions around the world. And despite whatever Elon Musk says, his company, Tesla Inc. (Nasdaq: TSLA), still holds a couple billion in BTC.

We noted above that we have seen this bearish Bitcoin cycle before. This is how tastes and preferences move. They are predictable; these volatile cycles are bound to happen as cryptocurrency evolves.

More predictable is that Bitcoin will have another halving in 2024. This event will reduce the amount of Bitcoin available to be mined. In 2019, the price soared to all-time highs in the months after this happened. And it will happen again.

JPMorgan Chase & Co. (NYSE: JPM) predicts Bitcoin will hit $146,000 if its total private-sector investment matches that of gold.

One venture capitalist, Tim Draper, believes Bitcoin could hit $250,000 in the next year as adoption increases the coin’s fundamental value.

And all things considered, Money Morning’s Tom Gentile predicts Bitcoin will hit $500,000 by the end of the decade.

Tom sums up the story perfectly, saying that while Bitcoin is volatile, it is “much, much calmer than it’s been.”