The moving average convergence divergence (MACD) indicator has flashed a warning for the price of Bitcoin, according to Bloomberg Analysis. The MACD has flipped negative, which for some analysts is a concerning signal that Bitcoin may continue to come under pressure. As a result of the recent downturn, Bitcoin has also fallen below its daily moving average (MA 50).
Another headwind for Bitcoin could be the U.S. dollar, which recently reached its highest level in more than a month. Bitcoin has always maintained an inverse relationship with the DXY Dollar index.
"At least in the short to medium term, Bitcoin's fortunes might still be tied to other long-duration growth assets such as technology stocks, Jamie Douglas Coutts," a Bloomberg Intelligence analyst noted.
During Friday's sell-off, Bitcoin fell to a low of $20,782, shedding more than 11% as a result of risk aversion in global markets brought on by concerns over the Federal Reserve's tightening monetary policy.
At the time of publication, Bitcoin was trading slightly up 2% at $21,300.
Will the weakness in the Bitcoin price continue?
Glassnode notes in a recent report that the Bitcoin market recently underwent a wave of short-term relief with prices trading higher than the realized price for 23 straight days. However, weakness in underlying network activity has manifested in the latest sell-off, with prices falling once again below this key cost-basis level.
It cites the main reason that led to the weakness and subsequent rejection of the price from $24.4K back below the realized price as investors from a variety of wallet-size cohorts decided to distribute during the last advance above the market average cost basis level.
While the present market structure is undoubtedly similar to the late-2018 bear market, it still lacks the macro trend reversal in profitability and demand inflows necessary for a sustainable uptrend.
Therefore, the ongoing cycle bottom consolidation phase is most likely, as Bitcoin investors try to build a strong base that is subject to persistent uncertainty and unfavorable events on the macroeconomic backdrop.