Two moving averages signal the impending formation of a bear market-style price floor, according to analysis conducted one month following Bitcoin’s weekly chart “death cross.”
Bitcoin (BTC) is currently undergoing an uncommon chart phenomenon that has traditionally resulted in 50% price declines, fresh data indicates.
On April 25, prominent Twitter account Nunya Bizniz spotted a new danger flag from BTC/two USD’s main moving averages.
BTC could take six months to recover from a drop, according to an analyst.
Bitcoin’s 20-week and 50-week moving averages (WMAs) have both begun to slope downward for the third time in its history.
While that may appear harmless at first glance, the first two occasions — in late 2014 and late 2018 — resulted in BTC/USD losing almost 50%.
On 3 occasions the slope of both the 20 & 50ma turned negative.
The first 2 lead to 50%+ corrections.
This time? pic.twitter.com/eIMsQ6dk8H
— Nunya Bizniz (@Pladizow) April 25, 2022
Both occurred at roughly the same point in Bitcoin’s four-year halving cycle, and while slightly ahead of schedule, it has already been almost as long since the 2018 fall, which peaked at $3,100.
“I believe this chart establishes real connections,” longtime macro investor and pundit Tuur Demeester said of the findings.
“If bitcoin is unable to capitulate and maintain a price over $35k this time, it would be a very positive indication. However, given the fragility of global markets, my base case forecast is a downward decline followed by a 3-6 month price rebound.”
The 20WMA crossed below the 50WMA in mid-March, according to data from TradingView, in what chartists refer to as a “death cross.” Contrary to its name, the occurrence has not always resulted in substantial losses.
The power of the dollar arouses growing mistrust.
Consensus continues to build during a prolonged period of Bitcoin price decline, which should coincide with a correction in highly connected global stock markets.
The US dollar’s strength in the face of the Federal Reserve’s anti-inflationary operations is also in focus as a preemptive warning sign for those predicting a shock event following two years of liquidity printing.
“DXY is edging closer to multi-decade highs,” analyst Dylan LeClair remarked Monday in a new Twitter discussion on the subject.
“The dollar’s strength against foreign fiat currencies continues to tighten financial conditions. By design, a tipping point is looming for a historically over-leveraged economic system.”
According to LeClair, it is very much a matter of short-term pain for BTC hodlers, followed by long-term gain. The rebound will occur as a result of the Fed’s “pivot,” since it will be unable to prolong inflation-fighting monetary tightening indefinitely.
“The Fed will eventually be obliged to resume easing, as any extended period of monetary tightening will result in a deep global recession,” he predicted.
“With this amount of global indebtedness, supply chain damage from the Ukraine crisis and China lockdowns equals sovereign defaults. BTC will take flight.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.