Bitcoin Key Moving Averages Indicate An Imminent Drop To $38,000

Overview

As 2025 drew to a close, Bitcoin faced a challenging market landscape, concluding the year significantly below its all-time highs. The emergence of a technical indicator known as a death cross raised concerns among analysts about potential price corrections.

Bitcoin’s Current Market Position

Bitcoin was trading more than 30% lower than its all-time highs, resting just above $89,200. The formation of a death cross, which occurred on December 8, involved the crossover of Bitcoin’s 10-week and 50-week simple moving averages (SMAs). This event has historically indicated significant price corrections in the cryptocurrency market. Market analyst Ali Martinez emphasized the critical nature of observing the behavior of these moving averages on the weekly chart.

Historical Context of the Death Cross

Historically, Bitcoin has experienced substantial price declines following the formation of a death cross between the 10-week and 50-week SMAs. Previous occurrences include notable declines of 67% in September 2014, 54% in June 2018, 53% in March 2020, and 64% in January 2022. Given this historical context, Martinez suggested that Bitcoin could face a correction ranging between 50% and 60%, potentially lowering its price to between $50,000 and $38,000.

Potential Scenarios for Bitcoin’s Future

Market expert Mags outlined two potential scenarios for Bitcoin’s trajectory in the near future. Following a downturn since its highs in October, Bitcoin has been trading around the $85,000 mark. During this period, Tether’s USDT dominance broke out of its previous range, remaining above the breakout zone. Given the inverse correlation between Bitcoin and USDT dominance, Mags identified two critical scenarios.

Bullish Scenario

The first scenario is bullish, predicated on a decline in USDT dominance. If USDT dominance decreases, the recent breakout could be viewed as a false signal. In this case, Bitcoin might experience a price surge, potentially reaching new all-time highs before any significant distribution occurs.

Bearish Scenario

Conversely, the second scenario paints a more bearish outlook. If the broader market trend weakens, Bitcoin may experience a temporary bounce, while USDT dominance forms a higher low near its mid-range before rising again. This situation could lead to a slow distribution pattern for Bitcoin, characterized by a gradual and choppy downward movement, rather than a sharp decline.

From Author

The current state of Bitcoin is reflective of the broader market’s volatility and the technical indicators that often dictate price movements. The death cross serves as a pivotal moment, potentially influencing trader sentiment and market behavior. Observing the interplay between Bitcoin and USDT dominance will be crucial in determining the future trajectory of Bitcoin’s price.

Impact on the Crypto Market

• The formation of the death cross may instill fear among investors, leading to increased selling pressure.
• Historical price corrections following similar indicators could deter new investments and create a bearish sentiment.
• The relationship between Bitcoin and USDT dominance could result in volatility, influencing trading strategies across the crypto market.
• Analysts and traders will closely monitor the next movements in USDT dominance as a key indicator of market direction.
• A significant correction could reshape market dynamics, impacting altcoins and overall market capitalization.