Bitcoin reiterates rare weekly chart signal that led to 50% BTC price declines

Bitcoin (BTC) is facing a rare chart phenomenon that has historically led to 50% price declines, new data shows.

In a tweet on April 25, popular account Nunya Bizniz noted a fresh warning sign of two key BTC/USD moving averages.

Analyst: BTC could spend 6 months recovering from slump

For only the third time in its history, Bitcoin’s 20-week and 50-week moving averages (WMAs) have started trending lower.

While this may seem harmless at first glance, the result of the first two events – late 2014 and late 2018 – was BTC/USD losing over 50%.

Both came at similar times in Bitcoin’s four-year halving cycles, and while slightly ahead of the curve, it’s almost that long since the 2018 dip that it bottomed at $3,100.

“I think there are valid parallels in this chart,” said longtime commentator and macro investor Tuur Demeester commented to the findings.

“If bitcoin fails to capitulate this time and sustain above $35,000, that would be an incredibly bullish sign. However, my baseline scenario is a slide down and a 3-6 month price recovery given weak global markets.”

BTC/USD 1-week candlestick chart (Bitstamp) with 20WMA and 50WMA. Source: TradingView

In mid-March, the 20WMA crossed the 50WMA, data from Cointelegraph Markets Pro and TradingView shows in what is commonly known as the “death cross” among chartists. Despite its name, the phenomenon has not always resulted in significant losses.

The strength of the dollar arouses increasing suspicion

As Cointelegraph reported, consensus continues to form that an extended period of price weakness for Bitcoin should coincide with a correction in highly correlated global stock markets.

Also Read: Bitcoin Fakes $39.5K Breakout on Wall Street as Elon Musk’s Twitter Takeover Approaches

The US dollar’s strength amid the Federal Reserve’s anti-inflationary maneuvers is also in focus as a pre-emptive warning sign for those forecasting a shock event after two years of liquidity pressures.

“DXY is nearing its multi-decade high,” analyst Dylan LeClair continued in one fresh twitter thread about Monday.

“USD continues to strengthen against foreign fiat currencies, tightening financial conditions. A breaking point for a historically over-leveraged economic system is deliberately approaching.”

US Dollar Currency Index (DXY) 1 week candlestick chart. Source: TradingView

For LeClair, it’s a case of short-term pain, long-term gain for BTC hodlers. The recovery will come via a Fed ‘pivot’, which will be unable to sustain inflation-busting monetary tightening for long.

“The Fed will eventually be forced to return to easing as any sustained period of monetary tightening will be followed by a deep global recession,” he predicts.

“Supply chain wreck from Ukraine conflict and China lockdowns with this level of global debt = sovereign defaults. BTC will fly.”

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should do your own research when making a decision.