Bitcoin Faces 63% Drop Warning Despite 2.4% Gain

Independent crypto analyst Ali Martinez has issued a warning about a potential downside for Bitcoin, citing a bearish signal from the Tom DeMark (TD) Sequential indicator. This indicator, known for its reliability in predicting major Bitcoin crashes, has flashed a sell signal, suggesting a possible 63% reversal in the cryptocurrency's value.

Martinez highlighted that the TD Sequential indicator has historically preceded significant drawdowns in Bitcoin's price. In 2015, a sell signal from the indicator was followed by a 75% drop in Bitcoin's value. Similarly, in 2018, the same setup saw Bitcoin plummet by over 85%. The TD Sequential indicator is designed to identify short-term trend reversals based on changes in intraday highs and lows, signaling when an asset has seen an overextended rally and is due for a correction.

According to Martinez's analysis, the current sell signal from the TD Sequential indicator suggests that Bitcoin's price could drop as much as 63% from its current level, potentially trading around $40,000. This would mark a substantial drawdown, as Bitcoin has been trading above the psychologically important $100,000 level for most of the recent months.

Despite the bearish signal, Bitcoin has shown resilience, topping the $110,000 mark for the first time since June 11. This surge in price was driven by significant inflows into U.S.-listed spot Bitcoin exchange-traded funds (ETFs), which drew in roughly $408 million on Wednesday. Since May 1, these BTC products have registered $9.91 billion in inflows, approximately 20% of their total inflows since launching in January 2024. As of the time of publication, Bitcoin was valued at $110,295, reflecting a more than 2.4% gain since Wednesday.

While the TD Sequential indicator's sell signal suggests a potential downside for Bitcoin, the cryptocurrency's recent performance indicates strong investor confidence. The significant inflows into BTC ETFs and the price surge above $110,000 demonstrate that investors remain bullish on Bitcoin's prospects. However, the bearish signal from the TD Sequential indicator serves as a reminder of the volatility and unpredictability of the cryptocurrency market, and investors should exercise caution when making investment decisions.