Bitcoin Flashes Rare Signal That Could Trigger Drop Below $40,000, Analyst Warns
Bitcoin (BTC) recently closed its June monthly candle above $100,000, raising hopes among bulls for continued upside throughout the summer. However, the digital asset has now flashed a rare signal that warns of a significant price pullback in the coming months.
Bitcoin Flashes Rare Bearish Signal
According to a recent X post by seasoned crypto analyst Ali Martinez, Bitcoin has triggered a Tom Demark (TD) Sequential sell-signal on the quarterly chart. Martinez noted that this is a rare and historically reliable warning that has often preceded major drawdowns for the cryptocurrency.
For the uninitiated, a quarterly TD Sequential sell-signal is a rare technical indicator that appears after multiple consecutive bullish quarterly candles, signaling long-term trend exhaustion. It suggests that Bitcoin may face a significant correction after a prolonged uptrend.
In 2015, its appearance was followed by a 75% decline in BTC, while in 2018, a similar signal preceded an 85% crash. Martinez cautioned that if the current signal plays out similarly, Bitcoin could fall as low as $40,000 – a potential 64% drop from current levels.
However, not all analysts share this bearish outlook. Fellow crypto analyst CryptoGoos interpreted Bitcoin’s quarterly close as bullish. He disputed comparisons with the 2021 double-top pattern and suggested that market structure remains strong.
BTC Looking Ready For New High?
Despite the bearish TD Sequential sell-signal, several analysts remain confident that a new all-time high (ATH) is on the horizon. Analyst Jelle pointed out that BTC has broken out and successfully re-tested a 3-day bullish pennant, making it look “ripe for liftoff.”
In another post, Jelle noted that if BTC decisively breaks above $110,000, its next target could be $130,000. For reference, BTC’s current ATH is $111,814, recorded on May 22.
Meanwhile, Merlijn The Trader highlighted a bullish technical setup on BTC’s daily chart. He pointed to a breakout from a falling wedge, followed by the formation of a bull flag – two strong continuation patterns. He stated:
Two of the strongest continuation patterns back to back. $140K is not hopium. It’s the projection. Strong hands are positioning now. Bitcoin doesn’t wait. The breakout is inevitable.
Additionally, Bitcoin’s weekly RSI continues to move toward the upper trendline – a pattern that has historically coincided with BTC reaching new highs. At press time, BTC trades at $109,438, up 2.9% in the past 24 hours.
Featured image from Unsplash.com, charts from X and TradingView.com
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