Bitcoin’s monthly MACD turns bearish as macro pressure mounts

Bitcoin’s monthly MACD turns bearish as BOJ tightening risks, strong dollar and ETF outflows hit liquidity, triggering liquidations and raising odds of a deeper crypto downturn.

Bitcoin’s monthly Moving Average Convergence Divergence (MACD) indicator has turned bearish, marking a technical shift that has historically preceded extended downturns in the cryptocurrency market, according to technical analysis data.

The monthly MACD for Bitcoin (BTC) has remained bearish since 2022. In November, the MACD histogram printed its first negative red bar, and the cryptocurrency declined significantly that month, according to market data. Previous instances of similar monthly momentum shifts in prior cycles were followed by extended downturns and sharp declines from earlier peaks.

Leveraged traders experienced heavy liquidations in the past day, and data showed substantial liquidity positioned above current prices, according to trading platform reports. Market analysts have stated that a potential short squeeze could be significant as bearish positioning reaches extreme levels.

Bitcoin downtrend could coincide with spike in Japanese bond yields

The decline coincided with a spike in Japanese bond yields, increasing the likelihood of tighter Bank of Japan monetary policy. Rising funding costs have forced a global repricing of risk assets, with high-volatility assets such as Bitcoin responding to the shift. The sell-off occurred during a thinly traded overnight period, when order books were thin and market makers operated at reduced volume.

With exchange-traded fund flows absent during the overnight session, a macro trigger pushed the market through several support levels, triggering exchange-wide stop-loss orders and forced liquidations of leveraged positions, according to market observers. Futures on precious metals rose as the cryptocurrency fell, with safe-haven assets receiving inflows as carry-trade pressures intensified.

The monthly bearish MACD crossover has occurred during major market cycles since 2012, with extended troughs following similar signals, according to historical data. The indicator measures momentum shifts between short- and long-term price averages, with a negative reading indicating a potential reversal from bullish to bearish trend.

Current macroeconomic conditions include fiscal pressure in Japan, sustained strength in the U.S. dollar, elevated Treasury yields, and recent outflows from spot Bitcoin ETFs, factors that analysts say increase the risk of further volatility.

From a technical perspective, the first support level sits near the trendline defined by higher lows established over the past year, according to technical analysts. A break below that trendline would expose prior lows dating back to last spring and earlier price peaks.

Ethereum (ETH) has also shown weakening technical indicators, with a death cross pattern in place as its shorter moving average fell below the longer-term moving average. The combination of Bitcoin’s MACD signal and Ethereum’s technical weakness points to broader weakness across cryptocurrency markets, according to market analysts.