Analyst Shares Bearish Outlook for Bitcoin Price

Bitcoin's recent price movements lack bullish support, and macroeconomist Henrik Zeberg warns that the long-term outlook may be worsening as well. In a post on the social media platform X, Zeberg delivered a strongly bearish evaluation of the current market conditions for Bitcoin. He concluded that Bitcoin is moving away from behaviors typical of a healthy asset expansion phase and is instead nearing a critical peak. He cautioned that this structure increases the risk of a significant price drop once the peak is reached.

Key Takeaways

Bitcoin currently lacks bullish momentum, with warnings of a deteriorating long-term outlook from economist Henrik Zeberg.
Zeberg identifies an expanding diagonal structure in Bitcoin's monthly chart, indicating potential imminent risk of a price drop.
A final price surge could occur, peaking around $150,000, before a significant decline akin to the dot-com crash.
Predictions suggest a possible price plummet of up to 97% from the peak, with targets as low as $3,000 to $4,000.
Technical analysis indicates bearish divergence and a cautionary outlook for investors relying solely on price increases.

Bitcoin

Understanding Bitcoin's Price Dynamics

Bitcoin's Expanding Diagonal and Potential Price Top

Zeberg's analysis hinges on observing the expanding diagonal structure within Bitcoin's monthly candlestick chart. This longstanding pattern has shown an increase in volatility since Bitcoin's inception, indicated by alternating higher highs and lower lows, producing a widening price range.

His shared chart suggests that Bitcoin is nearing the final stages of this pattern, which is likely to exhibit signs of exhaustion. Zeberg identifies the current price zone as a potential topping area, where any upward movement becomes less stable, even if prices continue to rise.

Bitcoin
Source: Chart from Henrik Zeberg on X

Interestingly, the chart indicates a potential final rally, or blow-off top, which could push Bitcoin prices to the mid-$150,000 range. However, Zeberg interprets this anticipated surge not as a strong bullish signal but instead as a sign of late-cycle overconfidence. Typically, expanding diagonals face violent corrections once they break, and Zeberg believes we may be nearing a peak in optimism right before a downturn.

Possible Consequences: From Euphoria to Sharp Declines

What stands out in Zeberg's analysis are his dramatic downside predictions. After the final euphoric rally, he forecasts that prices could soar above $150,000, followed by a catastrophic decline that many Bitcoin investors may find difficult to envision.

He compares the current market to the dot-com bubble when the Nasdaq composite index dropped more than 80%. Remember, Bitcoin has historically magnified both upward and downward price movements. According to his theory, a broader collapse involving AI and cryptocurrency could lead to a Bitcoin price decline of around 97% or 98% from the anticipated peak.

This prediction suggests a technical minimum target range of $3,000 to $4,000, with even larger drops possible. While the final rally could be impressive, enduring the aftermath of a crash could severely impact unprepared investors looking to ride the wave.

Technical Indicators Supporting the Bearish Outlook

Zeberg emphasizes momentum indicators that lend support to his bearish perspective. He notes that Bitcoin is exhibiting a significant bearish divergence on the monthly timeframe, where prices continue to rise without corresponding confirmation from momentum indicators, like the RSI.

Additionally, the monthly MACD indicator is either approaching or already showing a bearish crossover on historical charts.

Bitcoin
BTC trading at $87,952 on the 1D chart | Source: BTCUSDT on Tradingview.com