Coinshare research director James Butterfil called the infamous “BitcoinDeath Cross” indicator “Total Nonsense” and cites historical data suggesting these events Often, it precedes a positive return Not a long-term decline.
Butterfly issued a statement in a post on April 8th, one day after Bitcoin (BTC) registered the Death Cross pattern. On April 7th, BTC’s 50-day Simple Moving Average (SMA) fell to $86,485.72, falling below the 200-day SMA at $86,839.64.
Evaluating the reciprocal occurrence of the past 11 deaths, Buttefill found that BTC usually registers small losses within a month after the event. However, the median and mean values for the next 3 and 6 months are positive.
The Cross of Death is a commonly referenced technical signal that indicates potential downward momentum when the simple 50-day moving average falls below the 200-day SMA.
Historical data shows profits rather than collapse
Bitcoin returns following past death cross-events are very different. The dataset includes 11 historical instances dating back to 2011, with BTC prices being changed 12 months from each instance of the event after 1 month, 3 months, 6 months, and 12 months.
One month after the death cross, the median Bitcoin return was -1.6%, while the average was -3.2%. At the 3-month mark, these numbers improved to a median of 3.7% and an average of 13.6%.
The 6- and 12-month returns were more favorably skewed, with an average return of 17.0% and 52.3%, respectively, but the median 1-year return remained negative at -17.2%.
Performance divergence highlights the inconsistency of indicators as predictive tools. For example, the March 2020 death cross preceded a price rise of 450% a year later.
Similarly, the 2011 and 2015 events ultimately resulted in triple digit returns over the following year, contradicting the bearish interpretation of the signal. Conversely, the intersection of deaths in 2021 and 2018 preceded double-digit losses 12 months later.
Batafil pointed out these mixed results and argued that the patterns had no empirical reliability. He said:
“For those who think that the cross of Bitcoin’s death means anything, it’s completely nonsense in empirically and often a good buying opportunity.”
