Bitcoin found itself in a downturn, trading over 30% beneath its all-time highs and facing the emergence of a death cross—a technical signal that typically foreshadows major price corrections. Bitcoin is currently hovering just above $89,200, having recently experienced a crossover of its 10-week and 50-week simple moving averages on December 8. This significant development was brought to light by market analyst Ali Martinez. Martinez highlighted the significance of monitoring the actions of these two moving averages on the weekly chart. Historically, every instance of Bitcoin experiencing a death cross between the 10-week and 50-week SMAs has been succeeded by significant corrections.
The weekly chart of the cryptocurrency reveals that previous instances of these crossovers have resulted in significant price drops: 67% in September 2014, 54% in June 2018, 53% in March 2020, and 64% in January 2022. As the death cross takes shape, Martinez points out that historical trends indicate Bitcoin might undergo a correction ranging from 50% to 60%. This scenario could see its price drop to between $50,000 and $38,000. Market expert Mags has outlined two potential scenarios for Bitcoin’s near future, adding another layer of complexity to the analysis.
In the wake of Bitcoin’s decline from its October peaks exceeding $126,000, the cryptocurrency has been hovering near the $85,000 level for a number of weeks. Tether’s USDT dominance has surged beyond its previous range, now holding steady above the breakout zone. Given the inverse correlation between Bitcoin and USDT dominance, Mags has pinpointed two primary scenarios for the future. The first scenario, characterized by bullish sentiment, relies on the notion that a decline in USDT dominance might indicate that the current breakout is merely a fakeout. Mags asserts that such a move could potentially ignite another expansion in Bitcoin’s price, possibly even leading to a new all-time high before any significant distribution occurs.
On the flip side, Mags presented a second scenario highlighting initial indications of a bearish structure. Should the overall market trend show signs of weakening, Bitcoin could see a short-term rebound, as USDT dominance establishes a higher low around its mid-range before resuming its upward trajectory. In this scenario, BTC would display a slow distribution pattern, indicating neither a crash nor a swift decline, but instead a gradual, choppy downward movement typical of early bearish market behavior. The upcoming shift in USDT dominance is set to be pivotal in assessing whether the present market signifies just a temporary halt before additional price momentum or the beginning of a prolonged distribution phase that could pave the way for a new all-time high.