In the last few weeks, the sentiment around Bitcoin has turned around as bulls have pushed it past the $100,000 mark once again. Despite the recent drawdown, the BTC price is still bullish, with the market sentiment sitting in greed. However, a new development on the Bitcoin weekly chart could signal an end to the recent bullishness, just like it did back in 2022.
Sell Signal From 2022 Reappears
Back in 2022, large sell-offs triggered by the crash of the FTX crypto exchange brought an abrupt end to the Bitcoin bull market and plunged investors into months of despair as prices lagged. During this time, a sell signal on the Bitcoin Weekly SuperTrend went off and the result was the over 60% decline of the Bitcoin price. Since then, this sell signal has remained dormant, but now it has returned.
Crypto and CMT-Certified analyst Tony Spilotro took to X (formerly Twitter) to share a disturbing formation on the Bitcoin chart. The analyst explained that the sell signal on the weekly supertrend which had been dormant had finally returned. This signal was triggered just below the current all-time high of $109,000 and it seems the market is playing out accordingly.
The analyst explained that while the BTCUSD pair continues to show strength, it could be a false strength. This is because the US dollar has weakened recently, which means that this could be the reason behind the strength shown by the BTC price. Additionally, Tony revealed that even the BTCEUR pair has not shown any crossover of the LMACD.
Now, given that this rare bearish signal is flashing right now, it could have some serious implications for the crypto market. The first of these would be that this is the top of the market. In such a case, investors could be looking at another drawn-out bear market.
When it comes to how low the price could go, going by the 2022 performance, a 60% crash would bring the Bitcoin price back below $50,000. If this happens, it would ravage the already struggling altcoin market, as well as pushing BTC below the cost price of Strategy’s 500,000 BTC stash, which opens another can of worms on its own.
Bitcoin Needs To Maintain Range Breakout
In another post, Tony explained what needs to happen for the current uptrend to be sustained. He pointed out that range breakouts are only completed in a strong, large weekly candle. In addition, the breakout then needs to close out above the upper Bollinger Band for confirmation.
Presently, the BTC price is yet to close out above the upper Bollinger Band, which is sitting at $108,507. However, with two weeks still left to go in the month of May, bulls still have time to complete it before the month closes out. Otherwise, the current breakout could fail, and a reversal could push BTC further down. “Bulls want to see this within two weeks, leading to a strong May close,” Tony Spilotro said.
