Bitcoin (BTC) is facing a rare chart phenomenon that has historically led to 50% price dropsnew data show.
In an April 25 tweet, the popular account Nunya Bizniz signaled a new warning sign of two key moving averages of the BTC/USD pair.
Analyst: BTC Could Spend 6 Months Recovering From Drop
For the third time in its history, the 20 and 50 week moving averages of bitcoin have started to slope down..
While that may seem harmless at first glance, the result of the first two events – at the end of 2014 and at the end of 2018 – was that the BTC/USD pair lost more than 50%.
BTCweekly:
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
On 3 occasions, the slope of both the 20th and 50th of BTC turned negative.
The first 2 times it happened, they led to corrections of more than 50%.
This time? pic.twitter.com/eIMsQ6dk8H
Both occurred at similar points in Bitcoin’s halving cycles, and while it came a little early, it’s now almost as long since the 2018 crash, which bottomed out at $3,100..
“I think this graph draws valid parallels,” commented veteran commentator and macro investor Tuur Demeester about the findings.
“If bitcoin couldn’t capitulate this time and hold above $35,000, that would be an incredibly bullish sign. However, my base case, given how weak global markets look, is a slide to the downside and 3-6 months of price recovery.”
In mid-March, the 20WMA crossed below the 50WMAdata from Cointelegraph Markets Pro and TradingView show, in what is commonly known as a “death crossing” move among chartists. Despite its name, the phenomenon has not always translated into significant losses.
The strength of the dollar arouses more and more suspicions
As Cointelegraph reportedconsensus continues to form on a prolonged period of price weakness for bitcoin, which should come in line with a correction in strongly correlated global stock markets.
The strength of the US dollar in the face of the anti-inflationary maneuvers of the Federal Reserve is also in the spotlight as a warning signal preventive for those who forecast a shock event after two years of printing liquidity.
“DXY is nearing multi-decade highs,” analyst Dylan LeClair continued. in a new twitter thread on the subject on Monday.
“The dollar continues to strengthen against foreign fiat currencies, tightening financial conditions. A breaking point is approaching for an economic system historically overleveraged, by design.”
For LeClair, it’s very much a case of short-term pain, but long-term gain for BTC holders.. Recovery will come through a “pivot” from the Fed, which will be unable to sustain inflation-busting monetary tightening for long.
“The Fed will be forced back into easing as any sustained period of monetary tightening will be followed by a deep global recession”forecast.
“Supply chain destruction from Ukraine conflict and China shutdowns with this level of global indebtedness = sovereign defaults. BTC will fly.”
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