Analyst Reveals Why The Bitcoin Price Is Extremely Bearish Right Now

Overview

Recent insights from macroeconomist Henrik Zeberg suggest that Bitcoin’s short-term price action lacks bullish momentum, and the longer-term outlook may be deteriorating. Zeberg’s analysis indicates that Bitcoin is nearing a critical peak, which could lead to a significant downside move.

Current Market Assessment

Henrik Zeberg has shared a bearish assessment of Bitcoin’s market structure through a post on the social media platform X. He argues that Bitcoin is no longer behaving like an asset in a healthy expansion phase. Instead, he describes it as approaching an important peak, warning that the prevailing market structure carries an elevated risk of a sharp decline once that peak is reached.

Expanding Diagonal Structure

Zeberg’s outlook is based on the expanding diagonal structure observed in Bitcoin’s monthly candlestick chart. This long-term pattern has been present since Bitcoin’s inception and is characterized by increasing volatility, with the price making higher highs and lower lows within a widening range. According to Zeberg, Bitcoin appears to be in the final stages of this structure, which he believes will culminate in exhaustion.

He identifies the current price zone as a topping area, where further upside becomes increasingly unstable, even if prices continue to rise. Interestingly, the chart he analyzed suggests a potential final surge that could propel Bitcoin to a significantly high range, although this movement is not indicative of strength but rather a sign of late-cycle overconfidence.

Risks of a Market Reversal

Zeberg warns that expanding diagonal patterns tend to resolve violently once the structure breaks. He likens the current setup to a period of peak optimism just before a reversal occurs. His most controversial claims involve projected downside targets. He anticipates that after a euphoric rally, Bitcoin might experience a collapse that many investors currently consider unthinkable.

Zeberg draws a parallel between the current Bitcoin market and the dot-com era, where the Nasdaq experienced a significant decline. He notes that Bitcoin has historically amplified both upward and downward movements, leading him to predict a scenario where a broader bubble in AI and crypto unwinds, potentially resulting in a crash of 97% to 98% from the peak.

Momentum Indicators

To support his bearish outlook, Zeberg highlights various momentum indicators. He notes that Bitcoin is exhibiting massive bearish divergence on the monthly timeframe, where the price continues to rise while momentum indicators fail to confirm these highs. Additionally, the monthly MACD is approaching or has already printed a bearish crossover on the long-term chart, further reinforcing his analysis.

From author

The analysis presented by Zeberg raises critical questions about the sustainability of Bitcoin’s current price trajectory. His use of technical indicators and historical comparisons serves to emphasize the potential risks involved for investors. The warning signs he highlights could lead to a re-evaluation of investment strategies among those involved in the cryptocurrency market.

Impact on the crypto market

• Increased caution among investors as bearish sentiment gains traction.
• Potential for heightened volatility as the market approaches the identified peak.
• Scrutiny of momentum indicators may lead to more conservative trading strategies.
• Risk of a significant market correction could prompt a reevaluation of long-term investment positions.
• Potential for widespread panic should prices begin to decline sharply, reminiscent of historical market crashes.