Bitcoin Price Warning Signs Point To This Possibility

Bitcoin price action is displaying several warning signs that could indicate a short-term price decline despite an overall bullish macro landscape.

Technical analysis of both Bitcoin and the US dollar charts, combined with the M2 global liquidity index, suggests BTC may face downward pressure in the coming weeks before resuming its upward trajectory.

The cryptocurrency is currently struggling at the 50-day moving average while facing resistance from a lower high trend line.

US Dollar Correlation Points to Bitcoin Price Consolidation Phase

The US dollar chart reveals similarities between current market conditions and those observed in July 2017.

According to the analysis, the US dollar is currently breaking a key trend line and testing the lower boundary of a long-term wedge formation. This pattern closely resembles what occurred during the first Trump administration in mid-2017.

What makes this correlation particularly relevant is how Bitcoin behaved during that previous period.

In July 2017, Bitcoin price had just broken its previous all-time high and entered a retracement phase following its exit from the bear market. The current situation mirrors this pattern closely.

The analyst identifies an inverse head and shoulders pattern currently playing out in Bitcoin’s price structure.

Bitcoin is experiencing a throwback to the neckline of this pattern, which coincides with the 50-week moving average around $77,000.

This technical confluence provides a strong support zone that will likely be tested if the current consolidation breaks down.

Following the July 2017 consolidation, Bitcoin experienced a multi-month parabolic bull run alongside significant altcoin performance.

The analysis suggests that once the current consolidation completes and clarity emerges regarding Federal Reserve policy and tariff concerns, a similar powerful move could be in store.

Technical Analysis Indicates Possible Price Pullback

Bitcoin currently faces multiple resistance barriers on shorter timeframes that could trigger a pullback in price.

The cryptocurrency is holding its 50-day moving average (shown as a blue line on charts). This is directly confluent with a lower high trend line.

While there remains a possibility that Bitcoin could break through this resistance and continue higher, the analyst suggests it’s common to anticipate continued downside movement, especially while market participants await clarity on monetary policy and trade tariffs.

The decisive bullish trigger is a move above $87,000, which coincides with the 200-day moving average.

Reclaiming this level would signal a potential trend reversal to the upside. The analysis highlights the M2 global liquidity index as a critical factor currently influencing Bitcoin’s price action.

Bitcoin has been closely tracking this liquidity measure with a 108-day lag, which is the most commonly referenced timeframe.

According to this indicator, choppy market conditions could persist until approximately May 7th, suggesting Bitcoin may face turbulence in the coming weeks.

If these technical barriers are intact and the liquidity index is accurate, then Bitcoin can test the $77,000-$78,000 support zone again.

Smart Money Continues to Accumulate Despite Short-Term Fluctuations

Despite threats of possible short-term losses, the analyst notes that institutional money and smart money continue to purchase Bitcoin.

This purchasing behavior is comparable to what occurred in previous stability stages in 2024.

The report cites on-chain data that indicates “smart money” is taking advantage of such bottoming cycles to build up more of their Bitcoin reserves.

This trend was witnessed in past cycles of consolidation and appears to be continuing with the prevailing market conditions.

If you happen to own Bitcoin or altcoins, the advice is to anticipate likely volatility in place of expecting the prices to rise first.

While investors, particularly for altcoins, can desire a stunning upward trend, the current nature of the market demands patience and caution.

The overall message is one of short-term caution with long-term optimism. The analyst places the current situation in the context of a “collision of macro bullishness with zoomed-in uncertainty.”

He says that while the overall picture is still positive for Bitcoin, short-term price action can test the mettle of investors.