Key Points
- Bitcoin has fallen more than 34% since November
- It's now threatening to hit the 'death cross', when the 50-day moving average dips below the 200-day moving average
- Expert says death cross will be a great buying opportunity because long term outlook is positive
Bitcoin (CRYPTO: BTC) has hit some turbulence in recent months, falling more than 34% since its November high.
Now investors are watching to see whether this dip will turn into a mass sell-off.
According to the chief of cryptocurrency exchange Dacxi, Ian Lowe, the dreaded "death cross" could be a possibility.
"Speculation now falls as to whether Bitcoin will hit the 'death cross' of the 50-day moving-average moving below the long-term 200 day moving average," he said.
"We rather hope that it does!"
Why a death cross could be beneficial
Rather than sending investors into mourning, Lowe feels a death cross could provide a tempting entry point for, especially, younger punters.
He cited Dacxi research that 56% of investors in Australia are seeking to put money into crypto for the long term.
"The mood is shifting away from fly-by-night investors looking to get rich quick."
Other research points to similar sentiment.
A recent DeVere Group poll showed that crypto investors were not panicked at all by the current correction and still believed they would outperform shares in 2022.
Even DeVere chief Nigel Green was "taken aback" by that result.
"Investors are predicting that the markets in 2022 will perform in a similar way to 2021. That's to say that cryptocurrencies, even despite the slump in December, had a remarkable year," he said.
"Bitcoin ended the year up almost 65%, meanwhile, the S&P 500 Index (SP: .INX) — the benchmark index of the world's largest economy – managed around 28%, and gold was down around 7%."
According to Lowe, Bitcoin "is a bit like Lazarus".
"Bitcoin has come back from a Death Cross as recently as March 2020 and has rallied significantly since then," he said.
"Many will remember this and be willing to jump in and see if there's another rally ahead this time too."
Reasons to be bullish on crypto
Lowe also cited Australia's long-running obsession with property as another reason why crypto will remain tempting to millennials.
"Eye-watering real-estate prices mean crypto's slow start this year makes it the only game in town for Australian investors looking for assets with both a low barrier to entry and potential for growth."
Also, the mainstream investment community is starting to become convinced that cryptocurrencies actually have some intrinsic value, both economically and socially.
"The future of crypto is no longer closely tied to institutional adoption of any particular coin, as the blockchain continues to prove its utility and the reality and possibilities of Web3 become more obvious."
The current dip is "healthy", Lowe added, and would remind investors to diversify in crypto as much as shares.
"There is a lot of value in diversifying your cryptocurrency holdings by purchasing bundles of different cryptocurrencies, not just a single asset."
Green felt like investors are cooling on shares after a buoyant 2020 and 2021.
"Stocks, which have always traditionally made up the bulk of successful investors; portfolios, are falling out of favour, it seems, as a way to create and build wealth, with digital assets taking over."
