Bitcoin’s Price Struggle and Bearish Signal
The price of Bitcoin is currently facing difficulties in staying above $39,000 per coin, and as it continues to decline, a concerning bearish technical signal is being triggered.
Bitcoin Selloff Impacts Momentum
The selling pressure caused by FTX’s sale of nearly $1 billion in Grayscale GBTC shares has led to Bitcoin losing the $39,000 level. At present, it is trading around $38,900.
While the selloff hasn’t resulted in a significant breakdown below the key psychological level, there is a potential for additional downward price movement due to a bearish crossover of a momentum technical tool.
Confirmation of Bearish Crossover on LMACD
The bearish crossover on the weekly Logarithmic MACD (LMACD) is yet to be confirmed until the weekly candlestick closes. The LMACD is a logarithmic version of the MACD indicator.
When the lines on this tool converge and cross each other, it generates a signal for action. However, if the crossover does not confirm and the lines instead diverge, it indicates that traders should hold their position. In this case, Bitcoin would remain in a buy position until a bearish crossover occurs later on.
Past Instances of Bearish Crossovers
Bearish crossovers on the LMACD have previously impacted bull rallies. They occurred during the 2018 peak, the 2019 rally, and both 2021 double tops. However, it’s important to note that BTCUSD also experienced a bearish crossover in 2023 and late 2020 but eventually turned bullish again and resumed its upward trend. Therefore, even if the technical indicator crosses bearish, it does not necessarily mean the end of Bitcoin’s upside potential.
Hot Take: Bearish Momentum Signals Caution for Bitcoin
The recent selloff and the potential bearish crossover on the LMACD indicate caution for Bitcoin’s price movement. While it is uncertain whether this will result in a major breakdown or just a temporary setback, traders should closely monitor the confirmation of the bearish crossover and consider its implications for their positions. It is important to remember that past instances have seen Bitcoin recover from bearish crossovers, suggesting that there may still be room for upside potential in the future.
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