BTC: Bearish signal not seen in a year

Yes, we know – who wants to read about these types of signals during a bull market? While historical events do not guarantee future repeatability, every trade is based on specific information.

MACD: What is this?

MACD is a popular momentum indicator that helps traders spot potential trend reversals and strength. It compares two moving averages of an asset’s price to generate buy or sell signals. A bullish crossover occurs when the shorter (blue in the example) MACD line crosses the longer line (orange in the example) from below, indicating a potential upward trend. A bearish crossover happens when the shorter MACD line crosses the longer line from above, signaling a possible downward move.

So much for the theory – but what did it look like in practice?

Historical performance and market cyclicality

As you can see in the chart below, the Bitcoin market likes to move in waves. The analysis period covers almost three years, from spring 2022 to the present. Although the bear market (lasting until fall 2022) is governed by slightly different rules, the specific relationship is clearly visible.

The Bitcoin market cyclicality.

Each bearish signal is marked on the chart with a red vertical line, and each bullish signal is marked with a green one. The histogram (a series of bars) indicates how the difference between the short (blue) and long (orange) lines increases or decreases. A local low or high often occurred when this difference was the greatest. Of course, it was difficult to hit this moment at that time. Nevertheless, once you can see the appearance of another bar, that the absolute value is lower than the previous one – it may be a hint of a local low or high.

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2022: Bearish market

BTC bear markets have cyclically occurred in the second calendar year following a halving, with the last one happening in 2022. A bearish crossover occurred in April and lasted until August. During that time, BTC fell by as much as 55%, and the bullish crossover occurred after a 39% decline.

2023 – 2025: Bull market?

The strength of the bull market that began at the end of 2022 is clearly weaker than the others. However, this does not mean that traders did not have many opportunities to play on both sides of the market. Downside signals appeared as many as four times, and upside signals three times. What happened after each of them?

The first crossover occurred at the end of May 2023 and lasted less than a month. During this period, the MACD remained basically flat. The decline to the local low was less than 7%, and the bullish crossover occurred already 13% above the price from the bearish signal.

Another sell signal appeared in mid-July and lasted until mid-October 2023. During this time, the decline to the bottom was 15%, and the close of the candle on the bullish signal occurred at a similar level as the decline signal.

The penultimate bearish crossover happened in April 2024. In the middle of that year, the sideways trend lasted for half a year and ended with a buy signal in mid-October 2024. The decline to the local low was over 22%, and the buy signal occurred 9% higher than the sell signal.

As you can see, MACD generated verifiable, although delayed, signals. What could have supported the traders?

The old mathematician from Pizza

Leonardo Fibonacci didn’t actually discover the Fibonacci sequence! This mathematical pattern was known in ancient India long before, but Fibonacci made it famous in Europe through his 1202 book “Liber Abaci”, using it to solve a rabbit population puzzle. The sequence starts with 0 and 1, and each following number is the sum of the two before it (0, 1, 1, 2, 3, 5, 8…). But here’s the magic: in technical analysis, Fibonacci retracement levels (like 23.6%, 38.2%, 50%, and 61.8%) help traders identify potential support and resistance zones where prices may bounce or reverse. From market corrections to trend continuations, this sequence is a trader’s secret weapon!

Fibo levels in the first bull market crossover.

The important levels during market corrections were 0.382 and 0.5. The first referred to the candle bodies, and the second to the wick range.

Fibo levels in the second bull market crossover.

Interestingly, in the last case, the 0.382 level also played a key role in supporting the correction, with occasional falls to the 0.5 level. The price of $55k, which corresponded to a decline of about 11% from the bearish signal on the MACD, was a good moment to build a long position.

Fibo levels in the last bull market crossover.

Is history repeating itself? There is no way to say for sure. All we have are probabilities, each with certain risks and a cold mathematics that draws us levels. As you can see, 0.236 is the most important level so far, and the price does not fall below $91.5k. The next strong support is at 0.382, or $83.3k.

Conclusion

Corrections during bull markets in Bitcoin have always happened. During the 2017 upward time, they reached as much as 40%, but with each subsequent bull market, their depth decreased. We are currently about 10% from the ATH, which is neither a small nor a significant correction for this time of cycle. The key to confirming the signal is primarily observing it on lower time frames, as well as closing the week, which will decide on the bar on the histogram. For the signal to be confirmed, the color of the histogram must change to red. Trade responsibly and watch out for fakeouts on technical indicators, also looking at the fundamentals.

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