Bitcoin’s loss of key long-term support could lead to bigger losses if the bulls fail to regain control quickly.
Bitcoin’s (BTC) attempt to break above $90,000 failed this week.
The crypto asset is once again under technical pressure after falling below a key long-term trend indicator, prompting fresh downside warnings from market analysts.
A 50% drop could be next?
Crypto analyst Ali Martinez said that every time Bitcoin has lost its 50-week simple moving average (SMA) in previous cycles, the asset has registered an average decline of around 54%. Based on the current price level, Martinez observed that a similar historical move would mean a potential decline towards the $40,000 zone.
The 50-week SMA is widely seen as a dividing line between bullish and bearish market phases, and steady trading below it has tended to coincide with extended downturns rather than short corrections. While Martinez did not predict an immediate crash, there is a growing downside risk if Bitcoin fails to regain this level in the coming weeks.
Complementing the cautious outlook, CryptoQuant said Bitcoin appears to be in the later stages of its post-ATH correction. As such, weak demand continues to limit recovery efforts. Market sentiment remains ‘extreme fear’ and risk appetite has yet to meaningfully recover.
Despite continued inflows into spot Bitcoin ETFs during a record year for the broader ETF market, price action has remained subdued. The Coinbase Premium Index has remained negative as US demand has remained low, while whale inflows to the major exchanges have declined, indicating limited large-scale accumulation.
The analytics platform also noted increased activity of coins from 7 to 10 years old. Interestingly enough, this pattern is often seen near distribution phases or before trend transitions. The possibility is continued consolidation with a mild bearish bias unless demand indicators show an improvement.
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Isolated trading pair glitch
Instead of staging a year-end Christmas rally, Bitcoin experienced a brief but dramatic price deviation. On Binance, Bitcoin temporarily fell to $24,111 on the BTC/USD1 trading pair before recovering above $87,500 within seconds, exchange data showed. The move was limited to the USD1 pair and did not occur in other major BTC markets. USD1 is a recently launched stablecoin tied to the Trump family-backed World Liberty Financial (WLFI), and the pair later stabilized.
Experts participation that this was a liquidity event without any change in fundamentals or any mass liquidation. Joao Wedson from Alpharactal too revealed that such events are more likely to occur when the market is in a bearish phase.
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