In a significant development this week, Bitcoin price has crossed bearish on the weekly LMACD (Logarithmic Moving Average Convergence Divergence), marking the first time this has occurred in 2023.
Does this mean further decline for BTCUSD, or do bulls still have a chance to save the recent uptrend?
Bitcoin Momentum Takes A Turn For The Bears
Last night, the weekly candle in BTCUSD opened with a bearish crossover of the LMACD. Today, we saw a key support level fail at $27,000, prompting the cryptocurrency’s value tumble to $25,000.
This bearish crossover and selloff interestingly coincides with an announcement from the SEC about enforcement action against the cryptocurrency giant, Binance.
The SEC claims that Binance allegedly provided trading of unregistered securities to US traders. The list of securities included several top altcoins.
The timing of the legal action, technical indicator crossover, and selloff, gives weight to Sir John Templeton’s axiom, “show me the chart and I’ll tell you the news.” In other words, major news events often appear to be reflected in price movements and can be predicted by watching chart patterns.
Why The Crossover Might Not Crater Crypto
However, while the crypto market may be responding to immediate news, it’s essential to interpret these developments within a broader context. If momentum continues to descend from the zero line, we may witness a resumption of the prior bearish trend, which could pose challenges for Bitcoin investors.
Nevertheless, as seasoned traders will recall, the last time Bitcoin experienced a similar momentum downturn from this level on the LMACD was just before the 2020 bull run. Despite the initial bearish crossover, the downtrend proved to be short-lived, paving the way for significant upward price appreciation.
Looking at historical precedent, it’s possible that the current bearish turn may not be as dire as it initially seems. However, investors and traders should continue monitoring BTCSD weekly LMACD along with other technical indicators and major news events, maintaining a balanced and comprehensive perspective of the market.