Over the past week, Bitcoin price continued to hit successive lows, with hardly any hope of a bullish reversal. However, on Friday, February 13, the flagship cryptocurrency saw an upward momentum, with its value subsequently growing by 5.4%.
While this may have been good for short-term traders (particularly scalpers), a troubling future appears to be lurking for the major cryptocurrency. This bearish forecast is based on a recent technical assessment of the Bitcoin price.
SuperTrend indicator flashing sell sign on BTC monthly time frame
In a Feb. 14 post on social media platform X, influential tech analyst Ali Martinez said revealed that the Bitcoin market could soon experience a significant macro trend shift. This hypothesis is based on the SuperTrend Indicator, a technical tool that indicates whether an asset (in this case Bitcoin) is in an upward or downward trend.
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This indicator displays a tracking level that acts as dynamic support when the price is in an uptrend, or as resistance in a downtrend. When the price is above the SuperTrend line, the market is considered to be in an uptrend; while on the other hand, when the price is below the line, it indicates that the market is in a downtrend.
When a candle closes decisively below the dynamic trendline while previously in an uptrend, it indicates that the market has now turned bearish, and vice versa. Interestingly, the candle is now trading below the SuperTrend line on a monthly basis, indicating that the market may be bearish.
Interestingly, the current setup bears similarity to previous cycle transitions. From the chart shared by the analyst, it is clear that Bitcoin’s macro structure has undergone a series of expansions and deep retracements.
These retracements were also well illustrated on the indicator early on. Before the bear markets of late 2014-2015, 2018 and 2022, the SuperTrend Indicator gave a sell signal, after which the market entered a bearish phase.
Considering the sell signal was seen on Bitcoin’s monthly chart, this could be a sign that the retracement could happen here in the long term, as expected in a typical bear market. However, it is worth noting that current market dynamics are very different from previous cycles as institutions are more deeply involved and ETFs have expanded investors’ horizons.
These underlying changes could therefore play a role in the current cycle. If the SuperTrend indicator’s sell signal matches on-chain activity and macro events, and Bitcoin manages to close below the SuperTrend line, a bear market would likely ensue, one that sees Bitcoin devaluation by at least 60%.
On the other hand, if new demand enters the Bitcoin market and the flagship cryptocurrency shows resilience, the current signal could become a short-term warning, rather than a bear market signal.
Bitcoin price at a glance
At the time of writing, Bitcoin has a valuation of approximately $68,984, which reflects a 4.5% price increase in the past 24 hours. The world’s largest cryptocurrency has shrunk in value by about 29% on a monthly basis, according to data from CoinGecko.
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Featured image from iStock, chart from TradingView