Bitcoin’s monthly MACD flips bearish as macro headwinds hit liquidity and sentiment
Bitcoin’s long-term momentum gauge has turned negative again, reinforcing fears that the latest sell-off could be more than a brief correction and instead the start of a deeper downtrend across crypto.
On the monthly chart, Bitcoin’s Moving Average Convergence Divergence (MACD) indicator has crossed into bearish territory, a shift that in previous market cycles has often preceded prolonged periods of weakness and sharp drawdowns from local highs. The latest signal comes as global macro pressures intensify, including rising Japanese bond yields, a stronger U.S. dollar, elevated Treasury rates and renewed outflows from spot Bitcoin exchange-traded funds.
Monthly MACD turns negative
The MACD, a widely used momentum indicator that tracks the relationship between shorter- and longer-term moving averages, has once again flipped to a bearish configuration on Bitcoin’s monthly timeframe. A negative MACD reading, especially on such a high timeframe, is typically viewed as a sign that bullish momentum is fading and that a trend reversal or extended consolidation may be underway.
According to market data, Bitcoin’s monthly MACD has remained broadly bearish since 2022. In November, the MACD histogram printed its first clearly negative red bar after an earlier recovery attempt, and Bitcoin subsequently posted a steep price drop during that month. Historically, similar monthly momentum reversals in Bitcoin’s prior cycles have been followed by extended downturns, spanning several months and involving deep retracements from cycle peaks.
Technical analysts note that while no single indicator is infallible, a bearish crossover on the monthly MACD is rare and tends to align with major inflection points. In previous cycles, such signals have tended to appear near the transition from late-stage euphoria to broader risk-off conditions.
Leveraged traders hit by liquidations
The shift in momentum has coincided with a wave of forced deleveraging. Over the past 24 hours, leveraged traders have faced substantial liquidations as Bitcoin slid through key support levels. Data from derivatives platforms showed a concentration of resting liquidity and stop orders just above the prevailing spot price, making the market vulnerable to sharp moves once selling pressure intensified.
As short positioning reached extreme levels, some analysts highlighted the possibility of an aggressive short squeeze if prices were to rebound sharply. However, the immediate move has been driven instead by long-side liquidations and risk reduction, with traders stepping back from leveraged bets amid rising volatility and thinning liquidity.
BOJ tightening fears and a stronger dollar
The latest downturn in Bitcoin came as Japanese government bond yields spiked, stoking expectations that the Bank of Japan may move further away from its ultra-easy monetary stance. A potential shift toward tighter policy in Japan has implications well beyond domestic markets, as it can prompt unwinding of carry trades, higher global funding costs and a broader repricing of risk assets.
At the same time, the U.S. dollar has remained firm, supported by elevated Treasury yields and persistent uncertainty around the global growth outlook. A stronger dollar historically weighs on dollar-denominated risk assets, including cryptocurrencies, by tightening global liquidity conditions and making speculative trades more expensive to maintain.
High-volatility assets like Bitcoin are particularly sensitive to such macro shifts. As the cost of capital rises and safe-haven yields become more attractive, capital tends to rotate away from riskier segments of the market, amplifying downside moves once technical support levels are broken.
Thin overnight liquidity magnifies the move
The recent sell-off unfolded during a low-liquidity overnight session, when many market makers operate with reduced size and order books are relatively thin. With fewer orders on both sides of the book, even moderate selling pressure can push prices through multiple levels in quick succession.
Without the stabilizing presence of large spot ETF flows during those hours, a macro catalyst was enough to drive Bitcoin through key technical supports. The break triggered a cascade of exchange-wide stop-loss orders and liquidations of overleveraged positions, accelerating the downward move and deepening intraday volatility.
Safe-haven assets catch a bid
As Bitcoin and other digital assets sold off, futures tied to traditional safe-haven instruments, particularly precious metals, saw renewed buying interest. Flows into these assets picked up as investors sought refuge from mounting carry-trade pressures and uncertainty around central bank policy paths.
This rotation underscores a familiar pattern: in periods of heightened macro risk and tightening liquidity, capital often moves from speculative assets into instruments perceived as more resilient or stable. For Bitcoin, which some had framed as a digital safe haven, the recent action suggests that in practice it still trades more like a high-beta risk asset under current market conditions.
Historical significance of the monthly MACD signal
Since 2012, a bearish crossover on Bitcoin’s monthly MACD has tended to mark important cyclical turning points. Past occurrences have often been followed by extended troughs, where prices either trend lower or remain range-bound for months as excess leverage is flushed from the system and speculative enthusiasm cools.
The MACD works by measuring the difference between two exponential moving averages and tracking how that difference evolves over time. When the shorter-term momentum line crosses below the longer-term line and the histogram turns negative, it is interpreted as a sign that upside momentum is losing strength relative to longer-term trend dynamics. On short timeframes, such signals can be noisy. On monthly charts, however, they typically reflect a meaningful shift in the underlying trend.
While history does not guarantee a repeat, the convergence of a bearish monthly MACD with a challenging macro backdrop has led many traders to adopt a more cautious stance, closely watching whether Bitcoin can hold key structural supports.
Macro environment reinforces downside risks
The broader macroeconomic landscape is doing little to offset these technical warnings. Japan faces growing fiscal pressures and increasing scrutiny of its yield-curve policies, the U.S. dollar remains resilient, and Treasury yields continue to hover near elevated levels. These forces collectively tighten global financial conditions.
Spot Bitcoin ETFs, which had previously provided steady inflows and a supportive bid for the asset, have recently seen outflows, removing an important cushion against downside volatility. Reduced ETF demand means that short-term selling pressure from derivatives and spot markets encounters less offsetting institutional buying.
Analysts warn that this combination—bearish long-term momentum, hawkish or less-accommodative central banks, and softer ETF demand—raises the probability of further turbulence and potentially deeper corrections across the crypto complex.
Key technical levels to watch
From a purely technical standpoint, the first major support for Bitcoin now lies near a rising trendline formed by a series of higher lows over the past year. As long as this trendline holds, some traders will argue that the broader uptrend remains intact, with the current move characterised as a cyclical pullback within a longer-term bull structure.
However, a decisive break below that rising support would expose prior lows dating back to last spring, as well as earlier price peaks that could now act as new demand zones. Beneath those levels, the technical picture would darken considerably, suggesting that the market may be transitioning into a more pronounced bearish phase rather than a routine correction.
Market participants are closely monitoring whether buying interest re-emerges near these supports, as the strength—or absence—of dip demand will offer further clues about institutional and long-term holder conviction.
Ethereum’s technical backdrop also weakens
Weakness is not confined to Bitcoin. Ethereum has been flashing its own warning signs. On key timeframes, ETH has formed a so-called “death cross,” where a shorter moving average falls below a longer-term one. This pattern is widely viewed as a bearish signal that momentum has shifted against the asset.
Taken together, Bitcoin’s bearish monthly MACD signal and Ethereum’s deteriorating trend structure suggest that the current stress is not limited to a single coin but reflects a broader, system-wide softening in risk appetite across digital assets. Altcoins with thinner liquidity may be particularly vulnerable if selling in the major pairs intensifies.
What this means for traders and investors
For active traders, the confluence of bearish indicators and macro stress argues for tighter risk management. Many are reducing leverage, widening stop-loss buffers or shifting to shorter timeframes, where opportunities to trade sharp intraday swings may still exist but require disciplined execution.
Longer-term investors, meanwhile, are reassessing time horizons and position sizes. Some may view extended drawdowns historically as opportunities to accumulate at lower prices, but the current environment demands a clear understanding of personal risk tolerance, potential duration of downturns and the possibility that volatility remains elevated as macro conditions evolve.
Scenario planning: paths ahead for Bitcoin
Over the coming months, several scenarios are being debated:
1. Controlled correction and recovery
Bitcoin could find support near the rising trendline, consolidate in a broad range and gradually rebuild momentum if macro pressures stabilize, ETF flows normalize and risk appetite cautiously returns.
2. Deeper cyclical downturn
If global yields continue to rise, the dollar strengthens further and ETF outflows persist, Bitcoin may break key supports and revisit prior cycle lows or mid-cycle consolidation zones, mirroring patterns seen after previous bearish monthly MACD signals.
3. Choppy range-bound market
A third possibility is an extended period of sideways, high-volatility trading, where neither bulls nor bears dominate. In this scenario, the MACD would likely remain subdued for some time, while traders focus on shorter-term catalysts such as economic data releases, central bank announcements and idiosyncratic crypto events.
The role of macro data going forward
Incoming macro data releases—particularly inflation readings, employment figures and central bank communications—will likely play an outsized role in shaping crypto price action in the near term. Signs that major central banks are comfortable with current policy settings or leaning slightly more dovish could ease pressure on risk assets, including Bitcoin.
Conversely, any renewed push toward tighter policy, either through explicit rate hikes or more aggressive balance sheet reduction, would likely reinforce the bearish implications of the monthly MACD signal and keep volatility elevated.
A market at a crossroads
Bitcoin now sits at the intersection of a technical downturn signal and a macro environment marked by higher funding costs, strong sovereign yields and shifting institutional flows. The bearish monthly MACD adds weight to the argument that the easy phase of the last rally is over and that the market has entered a more complex, risk-sensitive phase.
Whether this ultimately resolves into a controlled consolidation, a deeper cyclical bear phase or something in between will depend on how both macro conditions and market structure evolve. For now, the message from the charts and the macro backdrop is clear: caution is back in focus, and the burden of proof has shifted to the bulls.