Bitcoin’s monthly MACD turns bearish as BOJ risks tighten, strong dollar and ETF outflows hit liquidity, triggering liquidations and increasing the likelihood of a deeper crypto decline.
Summary
- Bitcoin’s monthly MACD histogram printed a new negative bar, repeating patterns that previously preceded extended market declines since 2012.
- A macro shock from rising Japanese yields, the strong dollar and higher financing costs led to a sell-off in limited liquidity and heavy liquidations with debt.
- Ethereum is showing a death cross and weakening structure, strengthening the case for broader crypto weakness if Bitcoin loses its key trendline support.
Bitcoin’s monthly Moving Average Convergence Divergence (MACD) indicator has turned bearish, marking a technical shift that has historically preceded long-term downturns in the cryptocurrency market, according to technical analysis data.
The monthly MACD for Bitcoin (BTC) has remained bearish since 2022. In November, the MACD histogram printed its first negative red bar, and according to market data, the cryptocurrency fell significantly that month. Previous examples of similar monthly momentum shifts in previous cycles have been followed by extended downturns and sharp declines from previous peaks.
Leveraged traders have seen heavy liquidations over the past day and data shows liquidity is significantly higher than current prices, according to reports from trading platforms. Market analysts have stated that a potential short squeeze could be significant as bearish positioning reaches extreme levels.
Bitcoin’s downtrend could coincide with a spike in Japanese bond yields
The decline coincided with a spike in Japanese bond yields, raising the prospect of tighter monetary policy from the Bank of Japan. Rising financing costs have led to a global repricing of risky assets, with high-volatility assets such as Bitcoin responding to the shift. The sell-off occurred during an overnight period of thin trading, when order books were thin and market makers were operating on lower volume.
With exchange-traded funds absent during the overnight session, a macro trigger pushed the market through several support levels, leading to stock-wide stop-loss orders and forced liquidations of leveraged positions, according to market observers. Precious metals futures rose as the cryptocurrency fell, with safe-haven assets receiving inflows as pressure on the carry trade increased.
The monthly bearish MACD crossover has occurred during major market cycles since 2012, with longer lows following similar signals, according to historical data. The indicator measures momentum shifts between short-term and long-term price averages, with a negative value indicating a possible reversal from a bullish to a bearish trend.
Current macroeconomic conditions include fiscal pressures in Japan, continued strength of the US dollar, high government bond yields and recent outflows from spot Bitcoin ETFs, factors that analysts say increase the risk of further volatility.
From a technical perspective, the first level of support according to technical analysts is near the trendline defined by the higher lows of the past year. A break below that trendline would expose previous lows from last spring and previous price peaks.
Ethereum (ETH) has also shown weakening technical indicators, with a death cross pattern as the shorter-term moving average fell below the longer-term moving average. The combination of Bitcoin’s MACD signal and Ethereum’s technical weakness points to broader weakness in the cryptocurrency markets, according to market analysts.
