Bitcoin price is struggling to stay above $39,000 per coin and as it sinks lower, an ominous bearish technical signal is triggering.
Bitcoin Selloff Prompts Possible Change In Momentum
Selling pressure driven by FTX’s estate dumping nearly $1 billion in Grayscale GBTC shares caused Bitcoin price to lose the $39,000 level today, currently trading around $38,900 at the time of this writing.
The selloff hasn’t fallen deep enough for a convincing breakdown of the key psychological level, however, a bearish crossover of a momentum technical tool could trigger additional downward price action.
The recent drop has caused the weekly LMACD to cross bearish. A bearish crossover is a sell signal that warns of a change in medium-term momentum.
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Will The LMACD Confirm The Bearish Crossover?
The bearish crossover on the weekly LMACD isn’t confirmed until the weekly candlestick closes. The LMACD is the logarithmic version of the MACD indicator – which stands for Moving Average Convergence Divergence.
When the tool’s lines converge and cross, it produces a signal to take action. However, if the crossover doesn’t confirm and the two lines diverge instead, it tells a trader to stay in a position. In this case, Bitcoin would stay in the buy position until a bearish crossover appears later down the line.
Such bearish crossovers have the potential to stop a bull rally in its tracks. The LMACD crossed bearish around the 2018 peak, the 2019 rally, and at both 2021 double tops. It is worth noting, however, that BTCUSD crossed bearish in 2023, and in late 2020, but ultimately crossed back bullish and resumed a bull run. Another such scenario is possible, so even if the technical indicator crosses bearish, it doesn’t necessarily mean the end of upside for Bitcoin.
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