The cryptocurrency market faces a potential major correction as the Bitcoin Fischer Transform indicator turns bearish for the first time since 2021, according to leading technical analyst Tony Severino. This development has sparked concerns of a possible 66% price drop, mirroring previous market cycles.
Critical Technical Warning Signs Emerge
In a detailed analysis shared on X, Severino revealed that the total crypto market cap’s 12-week Fisher Transform has flipped bearish – a rare occurrence that previously preceded significant market downturns. The last two instances in December 2021 and January 2018 led to market-wide corrections of 66% and 82% respectively.
This warning aligns with recent findings from Bitcoin’s NVT indicator showing increased risk at the $83K level, suggesting multiple technical factors are converging to signal potential bearish momentum.
Multiple Technical Indicators Flash Red
The Fischer Transform indicator’s bearish flip is particularly significant given its track record of accurately identifying major market turning points. The indicator converts price data into a Gaussian normal distribution, effectively filtering out market noise to generate clearer signals.
Supporting technical signals include:
- Parabolic SAR showing momentum shift
- Average Directional Index (ADX) indicating weakening bullish trend
- Potential Supertrend DownTrend formation
Alternative Perspectives and Market Outlook
However, not all analysts share this bearish outlook. Crypto analyst Kevin Capital suggests the current phase is merely correctional and could lead to new highs. This perspective gains credence from recent whale accumulation data showing significant BTC purchases near current levels.
FAQ Section
What is the Fischer Transform indicator?
The Fischer Transform is a technical indicator that converts price data into a Gaussian normal distribution to identify potential market turning points with greater accuracy.
How reliable are previous Fischer Transform signals?
According to historical data, the 12-week Fischer Transform has accurately predicted major market turns in 2018 and 2021, with correction depths ranging from 66% to 82%.
What price levels should traders watch?
Key support levels include $83,000 (current trading range) and $22,000 (potential downside target). Resistance remains at recent highs near $84,000.
At press time, Bitcoin trades at $83,000, showing modest 1% gains over 24 hours despite the bearish technical outlook.