Bitcoin is navigating a precarious situation, having recently dipped below the $90,000 mark and settling in the mid-$80,000s. This dip has led several analysts to ponder whether the anticipated next major rally may be further off than many traders had hoped.
Prominent crypto analyst Tony “The Bull” Severino has issued a sobering technical outlook, drawing attention to the 6-week LMACD momentum indicator, which has recently turned bearish for the first time in several years. Severino emphasizes that this shift indicates that Bitcoin is not on the verge of the explosive recovery that many enthusiasts are eagerly awaiting.
The bearish crossover on the 6-week LMACD serves as a significant warning, highlighting that downward momentum is becoming increasingly pronounced. This indicator is notable for its ability to indicate long-term trend changes, and its lagging nature suggests that Bitcoin is already well into a downturn at this stage. Historical data reinforces this point, with past instances where Bitcoin experienced extended downturns lasting 812 days, 861 days, and 686 days following similar bearish crossovers.
Due to its lagging signal, the LMACD suggests that Bitcoin may hit its bottom long after its recent crossover occurred. Notably, Severino pointed out that bear-market lows have generally been observed between 250 and 365 days post-bearish flip, which means traders expecting a short-term bottom may be overlooking the indicator’s historical behavior.
Analysis of past downturns indicates that significant price drops often follow bearish flip signals, with previous cycles witnessing drawdowns of approximately 69% to 75%. This occurred despite Bitcoin already experiencing a notable decline before the LMACD flipped.
Despite the current bearish crossover, Severino notes that this signal is yet unconfirmed and will not be validated for another 15 days. He also stresses that while the LMACD indicates a bearish trend, it does not spell doom for Bitcoin’s long-term viability. Traders, however, should modulate their expectations regarding rapid recoveries, as past performance does not guarantee similar future outcomes.
The 6-week LMACD operates on a high time frame, capturing significant structural trends rather than short-term fluctuations in the market. Consequently, it is plausible that Bitcoin could remain in this range for an extended period or face additional declines before a meaningful recovery into a bullish phase can materialize.
As of now, Bitcoin is trading at $85,670, reflecting losses of 11% over the past week and 23% over the last month. Given Severino’s insights, the cryptocurrency’s price may continue to hover around these levels or decline further before any substantial rebound occurs.
