Analysts are warning that some subtle market signals suggest Bitcoin may be nearing the beginning of a bear market in November.
Selling pressure from long-term holders, weakening correlation with tech stocks, and Bitcoin’s failure to maintain key technical levels all indicate bullish momentum is fading. These trends indicate that downside risks are increasing even though the macro environment remains supportive.
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early warning signs
Market analysts are increasingly concerned that Bitcoin’s broader upward trend may be fading. One of the clearest warning signs comes from long-term holders.
Since mid-year, veteran investors and early whales have been steadily selling off their positions, a trend that has accelerated over the past year.
This change raised a red flag on the Coin Days Destroyed (CDD) indicator. This indicator shows when old inactive coins are suddenly moved or sold.
This month, negative CDD readings coincided with ETF outflows, resulting in a combination of weak demand and increased supply.
“Long-term holders may be allocating money to weaknesses rather than strengths, which is a potential bearish signal,” community analyst Martun said in a social media post.
While there is significant selling pressure from long-term holders, examining Bitcoin’s performance in the context of traditional financial markets raises broader concerns.
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Weak reaction to bullish catalyst
Wintermute data shows that Bitcoin continues to track closely with the Nasdaq 100, maintaining a correlation of nearly 0.8.
However, this relationship is becoming asymmetrical. When the Nasdaq falls, Bitcoin tends to fall more sharply. Even as the Nasdaq rises, Bitcoin’s reaction is muted.
This imbalance reflects behavior observed during the early bearish periodCryptocurrency Winter 2022 and more. This suggests that investors treat Bitcoin as a high-risk asset during economic downturns, but are hesitant to reward it when conditions improve.
“Historically, this type of negative asymmetry shows up not near peaks, but rather near bottoms. When BTC stocks fall more on bad days than they rise on good days, it usually indicates fatigue rather than strength,” Jasper de Mehre of Wintermute said in a blog post.
Adding to this alarm is Bitcoin’s recent failure to recover from its 50-week moving average. This is the first time since the last cycle’s bottom that BTC has not rebounded from its long-term support.
Early in the cycle, Bitcoin rallied from this level three times, with each recovery triggering a strong rally. The recent failure to retake the 50-week moving average suggests that a potential trend reversal may be forming.
While not conclusive in and of themselves, these signals become more pronounced as Bitcoin falls despite government stimulus and Federal Reserve interest rate cuts. Either development typically acts as a strong bullish catalyst.
