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In a significant development this week, bitcoin price has crossed bearish on the weekly LMACD (Logarithmic Moving Average Convergence Divergence), the first time this has happened in 2023.
Does this mean further downside for BTCUSD, or do the bulls still have a chance to rescue the recent uptrend?
Bitcoin Momentum Takes a Turn for the Bears
Last night, the weekly candle in BTCUSD opened with a bearish crossover from the LMACD. Today, we saw a failure of a key support level at $27,000, which sent the cryptocurrency down towards $25,000.
This bearish crossover and selloff interestingly coincided with an announcement from the SEC regarding enforcement action against cryptocurrency giant, Binance.
The SEC claims that Binance allegedly provided unregistered securities trading to US traders. The list of securities includes several top altcoins.
The timing of legal action, technical indicator crossovers, and selloffs lends weight to Sir John Templeton’s axiom, “Show me the charts and I’ll tell you the news.” In other words, major news events are often reflected in price movements and can be predicted by looking at chart patterns.
There is a bearish cross on the weekly LMACD | BTCUSD on TradingView.com
Why Crossover Crater Can’t Be Crypto
However, while the crypto market is reacting to the news immediately, it is necessary to interpret these developments in a wider context. If momentum continues to slide below the zero line, we could see a repeat of the previous bearish trend, which could pose challenges for bitcoin investors.
Yet, as seasoned traders will remember, the last time bitcoin experienced a decline at a similar pace from this level on the LMACD was just before the 2020 bull run. Despite an initial bearish crossover, the downtrend proved short-lived, giving way to a significant upward move.
Looking at historical precedents, it is possible that the current downturn may not be as dire as it initially seems. However, investors and traders should continue to monitor the BTCSD Weekly LMACD alongside other technical indicators and major news events, while maintaining a balanced and broad view of the market.
