Bitcoin has fallen below the 200-week EMA, more than 52% from the peak, risking a deadly capitulation.
Bitcoin (BTC) closed the week below a critical support level, falling below it for the first time since early February and hitting a two-week low, according to market data. Analysts have warned that the cryptocurrency could face further downward pressure.
Analyst Rekt Capital said Bitcoin closed last week below the 200-week exponential moving average (EMA), which sits in the center of a major confluence zone. The 200-week EMA aligns with the highs of the post-halving reaccumulation range, while the lows of the post-halving reaccumulation range define the broader structure of Bitcoin’s current range, according to the analyst.
Over the past three weeks, the cryptocurrency has attempted to develop a demand region around this area, which was previously a major supply zone, Rekt Capital noted. The analyst said this level has not historically been structurally reliable support, noting that it previously acted as resistance at 10 months.
“In the current structure, we have seen three consecutive weeks of high sales volume in this region, with limited significant buy-side response,” the analyst said in an article. The imbalance led to a weekly close below the 200-week EMA, losing it as support over this time frame, according to the analysis.
Rekt Capital stated that there is a high probability that Bitcoin will move back towards the bottom of this EMA in an attempt to turn it into new resistance. If the retest of the lower part is confirmed, the structure would move from defending support to confirming resistance at this level, the analyst said. The analyst added that if this level begins to act as resistance, further decline will become increasingly likely.
The analyst also noted that Bitcoin’s recent performance closely matches price action in previous cycles. In 2018 and 2022, a weekly close below the 200-week EMA acted as a structural trigger for the second wave of bearish acceleration, according to the analysis. “Bitcoin would attempt to reclaim the level, turn it into resistance, and then dissipate lower. This pattern is now trying to repeat itself,” Rekt Capital said.
Analyst Ali Martinez highlighted the cryptocurrency’s historical performance on the three-day chart, stating that this was one of the key periods for Bitcoin from a macro perspective. Martinez said market observers should watch for the upcoming interaction of the 50- and 200-day simple moving averages (SMAs), as the crossover between these two indicators over a three-day period has historically preceded the final descending leg of the bear market.
Bitcoin fell approximately 50% to 72% from its cycle highs in previous cycles before death crosses took place in subsequent years, according to historical data. Following these SMA crossovers, the cryptocurrency saw a further decline of 45-52%, Martinez noted. According to the analyst, Bitcoin has fallen more than 52% from its October high and is approaching a potential death crossover on the three-day chart by the end of February.
“If history repeats itself – even partially – it could signal the start of the final stage of this cycle,” Martinez said. The analyst predicted that another substantial correction from current levels could follow, placing the cryptocurrency’s target near lower support levels. “If the crossover is confirmed, it becomes a level to be taken very seriously,” Martinez said.