Looming Death Cross Suggests Bitcoin May Be Nearing Price Bottom

View Bitcoin's 50- and 200-day moving averageslook set to produce a death cross in the next week or two.

Historical data shows the cryptocurrency could bottom out if the cross is confirmed.

Potentially producing a so-called death cross, the 50-day moving average is falling fast and may drop below the 200-day MA over the next week or so.

A death cross is a long-term bear market indicator, according to technical analysis theory.

A market is often oversold by the time a cross is confirmed, as the MAs are based on past data and the crossovers are a product of price rallies or sell-offs.

In mid-September, 2015, bitcoin's pullback from highs near $250 also ran out of steam near $220 with the confirmation of a death cross.

The impending crossover may also turn out to be a bear trap, as bitcoin will most likely be oversold by then, having dropped more than 40 percent already from June's high of $13,800.

Bitcoin will likely remain on the defensive in the days leading up to the crossover and bottom-out below recent lows near $7,750.

Bitcoin bounced up from the 100-week moving average last week and witnessed a double bottom breakout on the 6-hour chart.

Put simply, the bearish sentiment is still quite strong and a deeper slide below the 100-week moving average at $7,755, possibly to support near $7,430 could be in the offing ahead of the death cross confirmation.