Over the past week, the price of Bitcoin has continued its downward spiral, with no prospects for a bullish reversal. However, on Friday, February 13, the flagship cryptocurrency saw a surge in momentum, when its value increased by 5.4%.
While this may be good for short-term traders (especially scalpers), a troubling future seems to await the first cryptocurrency. This bearish forecast is based on recent technical analysis of Bitcoin price.
SuperTrend Indicator Flashes Sell Log In BTC Monthly Timeframe
In an article on February 14 in the X forum, the powerful technical analyst Ali Martinez revealed that the Bitcoin market may have a significant change in the macro trend. This theory is based on the SuperTrend Indicator, which is a technical tool that shows whether an asset (in this case, Bitcoin) is in an uptrend or a downtrend.
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This indicator sets a tracking level that acts as dynamic support when the price is in an uptrend, or resistance when it is in a downtrend. If the price is above the SuperTrend line, the market is considered bullish; while the price is below the line, on the other hand, it shows that the market is in a downtrend.
If the candlestick closes firmly below the trendline of the reversal when it was previously in an uptrend, it indicates that the market has now reversed, and vice versa. Interestingly, on a monthly basis, the candle is now trading below the SuperTrend line, indicating that the market may be leaning bearish.
Interestingly, the current setup shares similarities with previous cycle switches. From the chart shared by the analyst, it is clear that Bitcoin’s main structure has gone through a series of expansions and deep recoveries.
This reversal is also appropriately reflected in the index in its initial stages. Before the end of the 2014-2015, 2018, and 2022 bear markets, the SuperTrend Indicator flashed a sell signal, after which the market entered the bearish phase.
Considering the sell signal seen on Bitcoin’s monthly chart, this could be a sign that the recovery here could be long-term, as expected in a typical bear market. However, it is worth noting that the current market dynamics are very different from previous cycles, as institutions are more involved and ETFs broaden the horizons of investors.
Therefore, these fundamental changes may play a role in this current cycle. If the sell signal from the SuperTrend indicator is accompanied by on-chain activity and major events, and Bitcoin is able to close below the SuperTrend line, it is possible that a bear market will follow, where a drop of Bitcoin of at least 60% may be seen.
On the other hand, if new demand enters the Bitcoin market, and the flagship cryptocurrency shows strength, the current signal can be a temporary warning, rather than a bear market signal.
Bitcoin Price At A Glance
As of this writing, Bitcoin is currently valued at $68,984, representing a 4.5% price jump in the last 24 hours. According to CoinGecko data, the world’s largest cryptocurrency has dropped in value by about 29% in the month-to-month period.
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Featured image from iStock, chart from TradingView
