Bitcoin Faces 64% Drop Risk as Sell-Signal Triggers

Bitcoin has recently triggered a Tom DeMark (TD) Sequential sell-signal on the quarterly chart, a rare and historically reliable warning that has often preceded major drawdowns for the cryptocurrency. This signal, highlighted by seasoned crypto analyst Ali Martinez, suggests that Bitcoin may face a significant correction after a prolonged uptrend. In the past, this indicator has been followed by substantial declines. For instance, in 2015, its appearance was followed by a 75% decline in BTC, while in 2018, a similar signal preceded an 85% crash. Martinez cautioned that if the current signal plays out similarly, Bitcoin could fall as low as $40,000 – a potential 64% drop from current levels.

Martinez highlighted the Tom DeMark (TD) Sequential, a technical tool known for flagging potential trend reversals. This same indicator flashed before major Bitcoin crashes in 2015 and 2018 — both of which were followed by drawdowns of over 75%. If history repeats, Bitcoin could tumble more than 60% from current levels, potentially dipping below the $40,000 mark.

At the time of writing, Bitcoin trades around $107,850, but on-chain data paints a gloomy picture. Large-scale transactions — those over $100,000 — have nearly halved in just over a month, falling from over 30,000 to under 17,000. Additional metrics reveal that net Bitcoin demand over a 30-day span has plunged by nearly 37,000 BTC, reinforcing concerns of fading interest among buyers.

While the market remains cautiously optimistic, these signals suggest that Bitcoin’s next move could be downward — and steep. However, not all analysts share this bearish outlook. Fellow crypto analyst CryptoGoos interpreted Bitcoin’s quarterly close as bullish. He disputed comparisons with the 2021 double-top pattern and suggested that market structure remains strong. Despite the bearish TD Sequential sell-signal, several analysts remain confident that a new all-time high (ATH) is on the horizon. Analyst Jelle pointed out that BTC has broken out and successfully re-tested a 3-day bullish pennant, making it look “ripe for liftoff.” In another post, Jelle noted that if BTC decisively breaks above $110,000, its next target could be $130,000. For reference, BTC’s current ATH is $111,814, recorded on May 22.

Meanwhile, Merlijn The Trader highlighted a bullish technical setup on BTC’s daily chart. He pointed to a breakout from a falling wedge, followed by the formation of a bull flag – two strong continuation patterns. He stated that $140,000 is not just a hopeful projection but a realistic target based on current trends. Additionally, Bitcoin’s weekly RSI continues to move toward the upper trendline – a pattern that has historically coincided with BTC reaching new highs. At the time of reporting, BTC trades at $109,438, up 2.9% in the past 24 hours.