Bitcoin is flashing a sell signal that's pointing to a 10% drop ahead, technical analyst says
Getty Images; Jenny Chang-Rodriguez/BI
- Bitcoin could be headed for a multiweek correction, according to Katie Stockton.
- The strategist said bitcoin was flashing a "sell" signal, given recent trading patterns.
- She predicted the crypto could find support around $84,500, implying a 10% drop from current levels.
Bitcoin's post-election momentum has weakened, and the crypto could soon see a sell-off that stretches on for weeks, according to a top technical strategist.
Katie Stockton, the founder of Fairlead Strategists, thinks bitcoin could be headed for another 10% drop, thanks to a handful of technical indicators that suggest bearish momentum over the near term.
Over the coming weeks, the cryptocurrency could drop to a support level of around $84,500, Stockton said, implying 10% downside from current levels. If the price continues to fall, the next support level could be around $73,800, she added, implying a 22% drop from current levels.
Stockton pointed to bitcoin falling below its 50-day moving average last week. That confirms an "intermediate-term overbought 'sell' signal," which supports a price correction in the first quarter of next year, she wrote in a note to clients on Tuesday.
"Short-term momentum is now negative per the daily MACD and the 20-day MA, which supports a move to a short-term bearish bias," Stockton said, referring to the daily moving average convergence/divergence and the 20-day moving average, two other indicators that reflect short-term pricing trends.
Despite the potential for near-term weakness, Stockton remained bullish on bitcoin over the longer term, pointing to several positive monthly indicators.
"Both the monthly stochastics and MACD continue to support a bullish long-term outlook going into the new year, so would view a correction as an opportunity to add exposure to bitcoin," she added.
The price of bitcoin has slid lower in recent weeks, erasing the gains that took the crypto to six-figure territory in December. The coin is now down 1% for the month, but is on track to end 2024 with a 116% gain.