Bitcoin price is struggling to stay above $39,000 per coin and as it drops lower, an ominous bearish technical signal is being issued.
Bitcoin Selloff Causes Possible Change in Momentum
The selling pressure, caused by the legacy of FTX dumping almost $1 billion worth of Grayscale GBTC shares, caused the Bitcoin price to lose the $39,000 level today and is currently trading around $38,900 at the time of writing.
The sell-off has not yet fallen deep enough for a convincing collapse at the key psychological level, but a bearish crossover from a technical momentum instrument could spark additional downward price action.
The recent decline has caused the weekly LMACD to turn bearish. A bearish crossover is a sell signal that warns of a change in medium-term momentum.
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Will the LMACD confirm the bearish crossover?
The bearish crossover on the weekly LMACD will not be confirmed until the weekly candlestick closes. The LMACD is the logarithmic version of the MACD indicator – which stands for Moving Average Convergence Divergence.
When the lines of the tool come together and intersect, it produces a signal to take action. However, if the crossover does not confirm and the two lines instead diverge, it tells a trader to stay in his position. In this case, Bitcoin would remain in the buy position until a bearish crossover appears later.
Such bearish crossovers have the potential to stop a bull rally. The LMACD turned bearish around the 2018 peak, the 2019 rally, and at both 2021 double tops. However, it is worth noting that BTCUSD crossed bearish in 2023 and late 2020, but eventually crossed back bullish and resumed a bull run. Another such scenario is possible, so even if the technical indicator turns bearish, it does not necessarily mean the end of the uptrend for Bitcoin.
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