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%.
On 3 occasions the slope of both the 20 & 50ma turned negative.
The first 2 lead to 50%+ corrections.
“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, 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 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 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.”
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 forecasted.
“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.
- ^ BTC (cointelegraph.com)
- ^ pic.twitter.com/eIMsQ6dk8H (t.co)
- ^ April 25, 2022 (twitter.com)
- ^ bottomed out at $3,100 (cointelegraph.com)
- ^ commented (twitter.com)
- ^ Cointelegraph Markets Pro (pro.cointelegraph.com)
- ^ TradingView (www.tradingview.com)
- ^ not always resulted in significant losses (cointelegraph.com)
- ^ consensus continues to form (cointelegraph.com)
- ^ heavily-correlated global stock markets (cointelegraph.com)
- ^ Bitcoin spoofs $39.5K breakout at Wall St open as Elon Musk Twitter takeover nears (cointelegraph.com)
- ^ strength of the United States dollar (cointelegraph.com)
- ^ in focus as a preemptive warning sign (cointelegraph.com)
- ^ continued (twitter.com)