This is a technical analysis post by CoinDesk analyst and chartered market technician Omkar Godbole.
A widely watched momentum indicator has flashed red, a warning that has signaled the start of a prolonged bitcoin run. recessions in every major cycle since 2012.
That indicator is the Monthly Chart Moving Average Convergence and Divergence (MACD) histogram. The indicator printed the first red bar below the zero line in November when prices fell by more than 17%, confirming a change from bullish to bearish trend.
In other words, the negative indicator reading means that the bull run that began around $20,000 in early November has ended and the bears have taken control.
Over the years, these so-called bearish crossovers of the monthly MACD histogram have not been kinder 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, indicating a continuation of the bearish trend that eventually saw prices fall below $20,000.
Similar patterns emerged following bearish MACD crossovers in both 2018 and 2014, and these signals preceded deepening bear markets.
While past performance does not guarantee future results, meaning the latest bearish MACD crossover does not necessarily trigger a slowdown, the current market environment supports the bearish argument.
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 capital outflows from cash ETFs, reinforce the negative signal.
The message is simple: traders should be alert to downside volatility. First support lies near $84,500, defined by the trend line joining the higher lows of 2023-2024. A breakout would expose the April low around $74,500, and then the 2021 high near $70,000.
Ether’s prospects also seem no more optimistic as it has confirmed a death cross, a bearish pattern marked by the 50-day SMA crossing below the 200-day SMA. It is a sign of a short-term trend that is underperforming a long-term trajectory, with the potential to evolve into a full-blown bear market.
While the term death cross sounds ominous, its track record as a reliable independent indicator in the ether market has been mixed.
