The Bitcoin price experienced a wild ride in the past week, skyrocketing to over $113,000 by mid-week before plummeting back down to approximately $107,000. As the leading cryptocurrency’s price action has stabilized over the last few days, it appears that market uncertainty continues to dominate the landscape. However, the Bitcoin price appears to be trending toward a bearish setup, as indicated by the negative shift of a relevant technical indicator on a longer timeframe. The following outlines the price movements of BTC during the last four instances when this indicator turned bearish. On October 24, crypto analyst shared a post on the social media, presenting a bearish perspective regarding Bitcoin’s price trajectory. The online pundit disclosed that the market leader may have reverted to a known stance that has frequently resulted in substantial losses (around 70%) historically.
This bearish prediction stems from the shifts observed in the Moving Average Convergence/Divergence indicator, which illustrates the relationship between the moving averages of an asset’s price, specifically the Bitcoin price in this scenario. A cross of the MACD line above the signal line typically indicates a bullish signal for the asset’s price. Meanwhile, when the MACD line crosses below the signal line, it suggests that the asset could be entering a bearish phase. The highlighted chart reveals that the Bitcoin MACD line has recently crossed below the signal line on the monthly timeframe, indicating that the leading cryptocurrency may be preparing for a prolonged phase of declining price action.
The historical performance of the Bitcoin price during these MACD crossover events is particularly noteworthy. Martinez reports that the price of BTC has experienced an average decline of 70% during the last four instances when this indicator turned negative. The previous instance of the Moving Average Convergence/Divergence indicator signaling a bearish trend occurred in September 2021, which initiated the market leader’s decline to approximately the $16,000 level by November 2022. The chart illustrates that the Bitcoin price experienced a decline of over 70% during this timeframe.
Historical trends suggest that BTC’s price could face a potential drop of 70% in the coming months, with a target set at approximately $33,000 from its current level. This pattern underscores the importance of closely monitoring technical indicators and preparing for potential volatility, as the market may see a prolonged bearish phase reminiscent of past MACD crossover events. Investors and traders are advised to exercise caution and consider risk management strategies in anticipation of the possible downward trajectory.