A key momentum indicator for Bitcoin (BTC) has turned bearish, coinciding with President Donald Trump’s escalating trade war rhetoric. The moving average convergence divergence (MACD) histogram on Bitcoin’s weekly chart has crossed below zero, signaling a potential shift in momentum. However, the current price action doesn’t fully validate this bearish reading yet.
The MACD turned positive in mid-October, strengthening the case for a rally to $100,000. While the latest bearish signal might alarm some bulls, especially retail buyers relying on technical analysis, BTC remains confined within the $90K to $100K range. The directionless trading diminishes the significance of the MACD’s bearish crossover.
It’s important to remember that indicators are derived from price action, not the other way around. MACD signals need to be confirmed by price movements. The indicator’s previous bullish signal in October was backed by prices breaking out of a multi-month trading range.
While the MACD isn’t a major concern yet, several macro factors warrant attention as potential sources of downside volatility. Trump’s tariff threats, if acted upon, could lead to higher bond yields and lower risk assets. The University of Michigan consumer sentiment survey showed that the tariff threat is already adversely impacting consumer expectations about price pressures in the economy.
Inflation expectations for the year ahead increased to 4.3% in February from 3.3% in January, the highest reading since November 2023. This could keep the Fed from cutting rates rapidly. The market is interpreting the Fed to be on a long pause, with growth holding up okay and the idea that even if inflation drops to 2%, the Fed doesn’t need to hurry to cut rates.
The upcoming U.S. CPI data for January, scheduled for release on Feb. 12, will provide further insights into the inflation picture. A break below the long-held support near $90,000 would validate the fresh negative reading on the MACD, confirming a bearish shift in momentum for Bitcoin.
While the current technical setup and macro factors suggest caution, Bitcoin’s long-term fundamentals remain strong. The cryptocurrency’s limited supply, increasing institutional adoption, and growing mainstream acceptance continue to provide a bullish backdrop for its future price appreciation.
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Tags: Bitcoin, MACD, Technical Analysis, Trump, Tariffs, Inflation