As evidenced by the recent analysis, Bitcoin (BTC) is facing a rare chart setup that has historically led to a subsequent 50% drop in price.
In a tweet on April 25, popular account Nunya Bizniz highlighted this new red flag by reporting two major moving averages on BTC/USD.
Absorption of the drop takes 6 months
For the third time in history, Bitcoin’s 20- and 50-week moving averages (WMA) have started to slope lower.
Although it may seem harmless at first glance, the outcome of the first two events – at the end of 2014 and the end of 2018 – was a Deep correction of more than 50% for BTC/USD.
On 3 occasions the 20th and 50th day trajectory became negative.
The first 2 resulted in retracements of 50%+.
What will happen this time?
On 3 occasions, the slopes of both 20 and 50ma have become negative.
The first 2 lead to 50% + corrections.
– Nonia Bizney (@bladizzo) 25 April 2022
Both events occurred at similar times during the four-year Bitcoin halving cycles, and while it’s now a bit early, it’s been about the same time since fall 2018 with the price hitting an all-time low of 3100 . $.
“I think this graph draws some pretty obvious comparisons”And comments Tor Demeester, analyst and longtime investor, is on the results.
“If Bitcoin doesn’t give up this time around and hold above $35,000, it will be an incredibly bullish sign. However, given the weakness of global markets, my base case is a bearish correction and a 3-6 month price recovery.”
Cointelegraph Markets Pro and TradingView, reported that the 20-WMA dropped the 50-WMA to the downside in mid-March, in what is commonly known as ‘Death Cross’ movement on the charts. Despite the good reputation, this phenomenon did not always lead to significant losses.
The strength of the dollar is raising more and more suspicion
As Cointelegraph recently reported, the notion of a prolonged period of weakness in Bitcoin continues to consolidate, in line with Global stock market correctionto which BTC is closely related.
The strength of the US dollar in the face of the Fed’s anti-inflation maneuvers is an additional early warning signal for those anticipating a shock after 2 years of infinite fluidity printing.
DXY near multi-decade highsAnd Reports Analyst Dylan Leclerc on Twitter April 24.
“The US dollar continues to strengthen against fiat foreign currencies, tightening financial conditions. The breaking point for a historically indebted economic system is approaching.”
For LeClair, there are short-term difficulties, but long-term gains are possible for BTC users. Recovery will come via the federal “pivot”, which Will not be able to maintain monetary policy tightening for long Inflation can be destroyed.
“The Fed will eventually have to return to quantitative easing, as any prolonged period of monetary tightening will be followed by a deep global recession.”predicted.
“Supply chain disruption due to conflict in Ukraine and blockade in China with this level of global debt = sovereign default. BTC will fly.”
The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment has risks – you should do your research before making any decision.