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MACD indicator signals a bearish trend for Bitcoin
Bitcoin bulls should be cautious: a key momentum indicator that has accurately predicted sell-offs since the cryptocurrency reached its all-time high in October has triggered again.
The indicator — the Moving Average Convergence Divergence (MACD) histogram — has just dropped below zero for the third time, signaling a renewed bearish trend.
What is MACD
Before diving into the market signal, it’s important to understand how MACD works.
The indicator uses two lines. The first is the MACD line, calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. The gap between them helps measure momentum.
The second is the signal line, which is a 9-day EMA of the MACD line itself.
The most important element is the histogram, which shows the difference between the MACD line and the signal line.
When the histogram turns positive, it signals bullish momentum; when negative — as now — bearish momentum. In both cases, the slope indicates the strength of the move.
The indicator is popular because it filters out market noise and provides a clear view of trend strength and changes. Right now, it clearly points to a bearish scenario.
Bitcoin daily chart with MACD histogram (TradingView)
Bitcoin drops when MACD turns red
Since Bitcoin surpassed $126,000 in October, MACD has shown near-perfect accuracy. When the indicator turned bearish, Bitcoin dropped sharply. When it turned bullish, only weak rebounds followed, without meaningful continuation.
The facts speak for themselves. Weeks of trading above $100,000 ended abruptly after the histogram dropped below zero on November 3. Prices fell from around $106,000 to $80,000 by November 21.
A brief rebound followed as MACD turned positive, but it didn’t last. Just two months later, on January 20, MACD gave another bearish signal when Bitcoin was trading near $90,000. The result was the same: a drop to nearly $60,000 by February 6, followed by a modest rebound capped around $75,000.
So far, each bullish MACD signal has only led to short-lived bounces that quickly faded, paving the way for deeper sell-offs once the indicator turned red again. This suggests that sellers remain firmly in control and can suppress any attempts by bulls to regain momentum.
Now the indicator has turned red once again. While past performance does not guarantee future results, when a signal with such a strong track record turns bearish, traders would be wise to exercise caution rather than ignore the warning. Bitcoin’s resilience amid the Iran conflict may soon weaken.
See also: "Trader earned nearly $2 million on the SIREN token"
