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Bitcoin Repeats Rare Weekly Chart Signal, Causing 50% BTC Price Drop
2022/04/28By:
One month after Bitcoin weekly chart “death cross,” analysis says two moving averages warn of a bearish market-style price floor in the making.
Bitcoin (BTC) is facing a rare chart phenomenon that 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.
Analysts: Bitcoin May Take 6 Months to Recover from Decline
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 that bottomed 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.”
In mid-March, the 20-WMA crossed under the 50-WMA, in what is commonly known as a “death cross” move among chartists. Despite its name, the phenomenon has not always resulted in significant losses.
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Stronger Dollar Raises Growing Suspicion
As recently 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.
The strength of the United States 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.
The Fed will eventually be forced to switch back to easing, as any sustained period of monetary tightening will lead to a deep global recession.
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