Over the past week, the Bitcoin price kept on putting in consecutive lows, with barely any hopes in sight for a bullish reversal. However, on Friday, February 13th, the flagship cryptocurrency saw an upward momentum boost, where its value subsequently grew by 5.4%. 

While this may have been good for short-term traders (specifically scalpers), a troubling future seems to be lying in wait for the premier cryptocurrency. This bearish prognosis is based on a recent technical evaluation of the Bitcoin price.

SuperTrend Indicator Flashes Sell Sign On BTC Monthly Timeframe 

In a 14 February post on social media platform X, influential technical analyst Ali Martinez revealed that the Bitcoin market could soon experience a significant macro trend shift. This hypothesis is based on the SuperTrend Indicator, which is a technical tool that indicates whether an asset (in this case, Bitcoin) is in an uptrend or in a downtrend.

Related Reading

This indicator plots a trailing level that acts as dynamic support when the price is in an uptrend, or resistance when in a downtrend. When the price is above the SuperTrend line, the market is considered to be in an uptrend; while when the price is below the line, on the other hand, it indicates that the market is in a downtrend.

When a candle closes decisively beneath the dynamic trend line when previously in an uptrend, it indicates that the market has now flipped bearish, and vice versa. Interestingly, on the monthly timeframe, the candle now trades beneath the SuperTrend line, indicating that the market may be leaning bearish. 

Source: @ali_charts on X

Interestingly, the current setup shares semblance with past cycle transitions. From the chart shared by the analyst, it is clear that Bitcoin’s macro structure has gone through a series of expansions and deep retracements.

These retracements were also properly illustrated on the indicator in their early stages. Before the late 2014-2015, the 2018, and the 2022 bear markets, the SuperTrend Indicator flashed a sell signal, after which the market entered a bearish phase.

Considering the sell signal was seen on Bitcoin’s monthly chart, this could be a sign that the retracement here might be long-term, as expected in a typical bear market. However, it is worth noting that the present market dynamics are very different from previous cycles, as institutions are more involved and ETFs have expanded investor horizons.

Hence, these underlying changes might play a role in the present cycle. If the sell signal from the SuperTrend indicator aligns with on-chain activity and macro events, and Bitcoin manages to close beneath the SuperTrend line, a bear market would likely follow, one where Bitcoin’s devaluation by at least 60% may be seen. 

On the other hand, if new demand enters the Bitcoin market, and the flagship cryptocurrency demonstrates resilience, the current signal could become a short-term warning, rather than a bear-market signal. 

Bitcoin Price At A Glance

As of this writing, Bitcoin holds a valuation of about $68,984, reflecting a 4.5% price jump in the past 24 hours. According to CoinGecko data, the world’s largest cryptocurrency has shrunk in value by approximately 29% on the monthly timeframe.

Related Reading

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView

Source