The cryptocurrency market is experiencing a significant shift as Bitcoin has officially entered a bear market, confirmed by a critical technical indicator. This change is substantiated by the monthly moving average convergence divergence (MACD) histogram, which has recently printed a bearish signal. The first red bar below the zero line appeared in November, coinciding with a price drop exceeding 17%. This trend signals a transition from bullish to bearish momentum, marking the end of the bull run that commenced at approximately $20,000.
Historically, similar bearish crossovers in the MACD have preceded extended downturns in major bitcoin cycles since 2012. For instance, after a correction from around $70,000 to $50,000 in late 2021, the MACD turned bearish in January 2022, leading to a further decline below $20,000. Such patterns were also evident in previous bear markets following MACD bearish crossovers in 2018 and 2014. While past performance is not a definitive predictor of future movements, the current market dynamics seem to align with a bearish outlook.
Several macroeconomic factors are contributing to this negative sentiment. Japan”s ongoing fiscal challenges, the resilience of the dollar index alongside Treasury yields amidst discussions of potential Federal Reserve rate cuts, and recent withdrawals from spot exchange-traded funds (ETFs) add to the caution. As a result, traders are advised to remain alert for potential downward volatility in the coming weeks.
The first significant support level for Bitcoin is estimated near $84,500, established by a trendline connecting higher lows from 2023 to 2024. A breach of this support could lead to further declines, exposing April”s low around $74,500, followed by the 2021 peak near $70,000.
Meanwhile, Ether is not faring much better, having confirmed a death cross. This pattern, characterized by the 50-day simple moving average (SMA) crossing below the 200-day SMA, suggests that short-term trends are underperforming compared to longer-term trajectories. While the death cross is often viewed as a bearish indicator, its reliability as a standalone signal in the Ethereum market has been inconsistent.
As the market grapples with these developments, participants should approach trading with caution and stay informed on both technical indicators and broader economic trends.
