Bitcoin's long-term prospects might be shifting as the monthly MACD histogram has turned red in November. This shift in the technical indicator has traditionally signaled the start of significant bear markets since 2012. After Bitcoin’s nearly 17% drop last month, the indicator fell below the zero mark, confirming a bearish trend.
Do Historical Indicators Suggest a Market Correction?
Historically, when Bitcoin’s MACD histogram turns negative on a monthly basis, it often aligns with the end of bullish cycles. A similar pattern was visible in late 2021, when Bitcoin’s value plummeted from $70,000 to $50,000. Analysts note that these “bearish crossover” signals are key momentum indicators foretelling a change in price direction, having previously appeared in 2018 and 2014 before bear market expansions.
It’s essential to remember that historical performance does not predict future outcomes. Macroeconomic factors, such as expectations for a Federal Reserve rate reduction and Japan’s financial challenges, might bolster the indicator’s bearish implications. Alongside these, outflows from spot ETFs and decreasing risk appetite due to the strengthening dollar and change in Treasury yields contribute to a grim market outlook.
What Are the Critical Support Levels for Bitcoin?
Bitcoin’s technical chart identifies $84,500 as the first critical support level. Should this breach, further downturns could push prices to $74,500 and possibly to the $70,000 peak of 2021. Market volatility could also increase, cautioning traders to be watchful.
Ethereum, Bitcoin’s closest altcoin counterpart, seems to mirror this negative trend. The 50-day moving average lagging below the 200-day average confirms a “death cross” formation, signaling short-term momentum has weakened compared to the long-term trend. However, such formations in Ethereum’s past haven’t always indicated prolonged downtrends.
Concrete observations from the current analysis include:
- •MACD histogram turning red historically aligns with bear markets.
- •A breach of critical support at $84,500 could lead to further declines.
- •Macroeconomic factors and ETF outflows sustain bearish sentiments.
- •Ethereum’s “death cross” hints at declining short-term momentum.
These developments suggest traders and investors should remain vigilant, adapting their strategies to current economic signals and technical indicators.