Bitcoin's Bullish Momentum Faces 60% Crash Risk as Sell Signal Reappears

In recent weeks, Bitcoin has experienced a resurgence in bullish sentiment, with prices surging past the $100,000 mark. Despite this upward trend, the market sentiment remains cautious, and a new development on the Bitcoin weekly chart has raised concerns about the sustainability of this bullish momentum.

Back in 2022, a significant sell-off triggered by the collapse of the FTX crypto exchange led to a dramatic end of the Bitcoin bull market, resulting in a more than 60% decline in the price of Bitcoin. During this period, a sell signal on the Bitcoin Weekly SuperTrend was activated, which coincided with the market downturn. This sell signal has remained inactive since then, but it has recently resurfaced, sparking worries among investors.

Crypto and CMT-Certified analyst Tony Spilotro highlighted this concerning formation on the Bitcoin chart. He noted that the sell signal on the weekly supertrend, which had been dormant, has now reappeared. This signal was triggered just below the current all-time high of $109,000, and the market appears to be reacting accordingly.

Spilotro explained that while the BTC/USD pair continues to show strength, this could be attributed to the recent weakening of the US dollar. Additionally, the BTCEUR pair has not shown any crossover of the LMACD, further complicating the market outlook.

The reappearance of this rare bearish signal could have significant implications for the crypto market. It may indicate that the current market peak has been reached, potentially leading to another prolonged bear market. If the 2022 performance is any indication, a 60% crash could bring the Bitcoin price back below $50,000. Such a decline would severely impact the already struggling altcoin market and could push BTC below the cost price of Strategy’s 500,000 BTC stash, adding further complexity to the situation.

To sustain the current uptrend, Bitcoin needs to maintain a range breakout. According to Spilotro, range breakouts are only confirmed in a strong, large weekly candle that closes above the upper Bollinger Band. Currently, the BTC price has not closed above the upper Bollinger Band, which is at $108,507. With two weeks remaining in May, bulls still have time to achieve this before the month ends. Failure to do so could result in a reversal, pushing BTC further down.