Bitcoin Continues Steady Decline: Is a Crash on the Horizon?

A steady decline of lower highs and lower lows over nearly three weeks has meant that the $BTC price is currently well back inside what is almost a 4-month long bear flag. With Bitcoin looking as though it may continue to subside, could the bears really take control and force this correction into a tailspin?

Back into the channel or yet another rejection?

Source: TradingView

The short-term time frame for $BTC shows that the price is still bumping along below the descending channel, having arrived at the underside of that channel once again. It is now up to the bulls to force the price back into the channel. If this does not happen, and the probabilities are for a rejection, the price would then fall through the ascending trendline and the next bearish phase could begin.

If the bulls do surprise to the upside, the $78,000 resistance band overhead, together with the 200 SMA, are another obstacle to further price appreciation. 

Lending their signal to the bear case are the short-term Stochastic RSI momentum indicators. The 4-hour, 8-hour, and 12-hour indicators are right at the top of their range and therefore they are not far away from signalling negative price momentum as they roll over and come back down.

Golden cross coming soon

Source: TradingView

The negative picture for the daily time frame is that the 200-day simple moving average (SMA) is coming down, to all intents and purposes to force the $BTC price back down. If another lower low is made, the current bearish phase will probably continue. In the RSI at the bottom of the chart, the indicator line has clearly dropped out of the last ascending channel and might be about to be rejected from the RSI-based moving average line (in yellow).

All that said, the 50-day SMA is rising fast and is only a matter of a week or so away from crossing above the 200-day SMA, which would be a “golden cross”. Could this be the golden cross that initiates the next bull market?

Bottom of the bear market to take place below 200-week SMA

Source: TradingView

The weekly chart with the main moving averages gives us food for thought. First, it must be noted that the current bear flag has been redrawn with a much sharper ascending angle, allowing for the price action to still be contained within. This would mean that the $BTC price would not have as far to go in order to drop out of the bottom.

The 200-week, 100-week, and 50-week simple moving averages are still in their bull market order, with the 50-week above, the 200-week below, and the 100-week sandwiched between. However, it can be noted that the 50-week is falling quickly and is likely to fall below the 100-week in the next few weeks. That said, it still has a long way to go to get below the 200-week SMA, which was last achieved shortly into the new bull market early in 2023.

As can be seen, it was around the 200-week SMA where most of the bottom price action of the last bear market took place. It would not be a surprise if this happened again, especially considering the 53 and 54 week lengths of the last two bear markets. So far in this bear market we are only out to 33 weeks. 54 weeks would take the end of this bear market out to mid-October. If this is going to be the case, it would be imagined that the current $60K bottom would be tested.

The MACD indicator at the foot of the chart is showing a series of slightly shorter light green bars in the histogram. Are these bars going to turn red again, signalling more downside?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.