Bitcoin chart suggests a correction phase—Verifying market signals through technical analysis

Different signals are lighting up in the cryptocurrency market. On January 2nd, renowned technical analyst Ari Chart pointed out the formation of an important technical pattern on the weekly Bitcoin chart. The interaction between the 10-week simple moving average and the 50-week simple moving average suggests that the market is entering a new phase.

Currently, Bitcoin is at the $89,320 level, experiencing a downward pressure of -6.07% over the past 7 days. The warning signals from technical indicators at this timing are an important consideration for investors.

Interpreting Current Market Signals from Technical Indicators

The pattern called “Death Cross” appearing on the Bitcoin chart refers to the short-term moving average falling below the long-term moving average. This has traditionally been considered a signal indicating downward market pressure.

According to reports from PANews, about three weeks have passed since a similar Death Cross occurred on December 8th, and technical analysts are paying attention to the historical influence of this pattern. The crossover of moving averages is not just a mathematical phenomenon but has functioned as an important indicator reflecting shifts in market psychology.

Repeating Patterns in History—Verification of the Four Past Death Crosses

In the Bitcoin market, the same technical pattern has appeared multiple times. Analyzing past data reveals the reproducibility of these patterns.

• September 2014: Major decline of -67% after the Death Cross
• June 2018: Adjustment of -54% after the Death Cross
• March 2020: Drop of -53% following the Death Cross
• January 2022: Severe adjustment of -64% after the Death Cross

From these four historical cases, it is evident that the typical decline after a Death Cross tends to be in the range of 50% to 60%. If historical patterns remain valid today, the possibility of the Bitcoin market experiencing a significant correction cannot be ignored.

Price Adjustment Scenarios and Long-term Investment Opportunities

Based on current technical analysis, if Bitcoin experiences a 50% to 60% correction, the price could fluctuate between $50,000 and $38,000. While this scenario may be a short-term concern for many market participants, it can also be viewed from a different perspective.

For investors aiming to build long-term assets, such a correction phase holds different implications. Historically, Bitcoin has experienced such substantial declines and then transitioned into a more robust upward trend. While current technical signals indeed raise caution, they also suggest the potential for strategic buying opportunities indicated by Bitcoin chart signals.

From a technical analysis perspective, this is a phase requiring flexible strategies to respond to shifts in market psychology.