The FBI’s successful recovery of the cryptocurrency ransom paid to the hackers of Colonial Pipeline could lead to a further tumble in bitcoin prices, some analysts have warned, as the coin heads towards a potential “death cross” indicative of more sell-offs.
Market watchers say if the average price of BTC over the last 50 days goes below its 200-day moving average, the cryptocurrency may reach the dreaded death cross - a point on the charts that would suggest the digital currency’s value may be subdued for a longer time to come.
Since the investigative agency’s move involved obtaining a password to DarkSide’s Bitcoin account to recover the crypto assets, experts believe it sends a signal that the digital currency is not completely beyond government control.
While the current downward trend in bitcoin prices is linked to a mix of several other factors such as Tesla no longer accepting the cryptocurrency as a payment mode for its vehicles, and China’s ban on BTC mining and trading, some have linked the FBI’s recovery of the Colonial Pipeline bitcoin ransom to the latest crash in prices.
Experts nonetheless pointed out that the recovered cryptocurrency only amounted to 69 bitcoins worth $2.3m, adding that it is not a reflection of the network’s overall security or strength.
They also highlighted that the investigators were able to recover the bitcoins only since the hackers had left a chunk of the ransom on an exchange or custodial wallet in the US, subject to law enforcement interference, suggesting that if the hackers had moved the money to cold storage it may not have been recovered.
Now as BTC prices stumble further, anonymous analyst Rekt Capital and several others believe the current trajectory hints at the potential formation of a death cross.
“A death cross could be an indication that prices may remain subdued for a while to come,” Mati Greenspan, founder of Quantum Economics, was quoted as saying by Bloomberg.
However, Greenspan believes a death cross is typically followed by a “golden cross,” a period marked by a bullish signal in which prices rise again.
“If prices bottom out around here, we can probably expect a strong rally to resume once the market is ready for it,” he added.