Bitcoin repeats rare weekly chart signal that resulted in 50% BTC price dips

Bitcoin (BTC) is facing a rare chart phenomenon which has historically resulted in 50% price drawdowns, new data shows.

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

Analyst: BTC could spend 6 months recovering from dip

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

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

Both came at similar points in Bitcoin’s four-year halving cycles, and while slightly ahead of time, it has now been nearly as long since the 2018 dip, this bottoming out at $3,100.

“I think this chart draws valid parallels,” longtime commentator and macro investor Tuur Demeester commented on the findings.

“If bitcoin could not capitulate this time and hold above $35k, it would be an incredibly bullish sign. My base case scenario however, given how weak global markets look, is a downwards slide and 3-6 months of price recovery.”

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

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

Dollar strength sparks increasing suspicion

As Cointelegraph reported, consensus continues to form over a protracted period of price weakness for Bitcoin, which should come in line with a correction on heavily-correlated global stock markets.

Related: Bitcoin spoofs $39.5K breakout at Wall St open as Elon Musk Twitter takeover nears

The strength of the U.S. dollar in the face of anti-inflation maneuvers by the Federal Reserve is also in focus as a preemptive warning sign for those forecasting a shock event after two years of liquidity printing.

“DXY approaching multi-decade highs,” analyst Dylan LeClair continued in a fresh Twitter thread on the topic Monday.

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

U.S. dollar currency index (DXY) 1-week candle chart. Source: TradingView

For LeClair, it is very much a case of short-term pain, long-term gain for BTC hodlers. The recovery will come via a “pivot” by the Fed, which will be unable to sustain inflation-busting monetary tightening for long.

“Fed will eventually be forced to switch back to easing, as a deep global recession will follow any sustained period of monetary tightening,” he forecast.

“Supply chain wreckage from Ukraine conflict & China lockdowns with this level of global indebtedness = sovereign defaults. BTC will fly.”

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

All Dutch and English crypto news!

Swiss asset manager Julius Baer eyes crypto and DeFi potential

132-year-old Swiss asset management firm Julius Baer intends to offer exposure to cryptocurrencies and decentralized finance (DeFi) for its high net-worth clients. The firm's CEO Philipp...

Jack Dorsey’s Block hits $1.3B in Q1 profits, $43M in BTC trading revenue

Block, the pro-Bitcoin (BTC) umbrella company that hosts Cash App, Square and Afterpay, continues its growth in 2022. According to its Shareholder letter, in the...

Bitcoin must defend these price levels to avoid ‘much deeper’ fall: Analysis

Bitcoin (BTC) may be attempting to flip $30,000 to support on May 19, but for one group of analysts, attention is focused firmly on a...

BNB Chain offers another lifeline to Terra ecosystem projects

Binance will welcome migration and offer support to projects from the Terra (LUNA) ecosystem following this month's unraveling of the decentralized finance (DeFi) platform and...

Beste exchanges

Koop je crypto bij Bitvavo