This is a technical analysis article written by CoinDesk Analyst and Certified Market Technician Omkar Godbole.
A widely watched momentum indicator flashed red, a warning that signaled the start of extended bitcoin trading. slowdowns in every major cycle since 2012.
This indicator is the moving average convergence divergence (MACD) histogram of the monthly chart. The indicator printed the first red bar below the zero line in November as prices fell more than 17%, confirming a change from bullish to bearish trend.
In other words, the negative reading of the indicator means that the bull run that started around $20,000 in early November is over and the bears have taken over.
Over the years, these so-called bearish crossovers of the monthly MACD histogram have not been more favorable to the bulls. For example, after Bitcoin corrected from around $70,000 to $50,000 in late 2021, the MACD indicator turned bearish in January 2022, signaling the continuation of the downtrend that eventually saw prices fall below $20,000.
Similar trends emerged following the MACD bearish crossovers in 2018 and 2014, with these signals preceding deepening bear markets.
Although past performance does not guarantee future results, meaning the MACD’s latest bearish crossover will not necessarily trigger a downturn, the current market environment supports the bearish scenario.
Several macroeconomic risks, including Japan’s fiscal stress, the resilience of the dollar index and Treasury yields despite talk of Federal Reserve rate cuts, and recent cash ETF outflows, reinforce this negative signal.
The message is simple: traders must be vigilant against downward volatility. The first support lies near $84,500, defined by the trendline connecting the upper lows of 2023 and 2024. A breakout would expose the April low at around $74,500 and then the 2021 high near $70,000.
Ether’s outlook doesn’t look any rosier either, as it confirmed a death crossover, a downtrend marked by the 50-day simple moving average (SMA) moving below the 200-day SMA. This is a sign of a short-term trend underperforming a long-term trajectory, with the potential to evolve into a true bear market.
Although the term death cross sounds ominous, its track record as a reliable standalone indicator in the ether market is mixed.
