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Crypto Potato 2025-12-25 12:32:31

Is Bitcoin Headed for $40,000? Technicals and On-Chain Data Turn Cautious

Bitcoin’s (BTC) attempt to push above $90,000 remained unsuccessful this week. The crypto asset is once again under technical pressure after slipping below an important long-term trend indicator, prompting fresh downside warnings from market analysts. 50% Drop Could Be Next? Crypto analyst Ali Martinez said that every time Bitcoin has lost its 50-week simple moving average (SMA) in past cycles, the asset has gone on to record an average decline of around 54%. Based on current price levels, Martinez observed that a similar historical move would mean a potential drop toward the $40,000 zone. The 50-week SMA is widely watched as a dividing line between bullish and bearish market phases, and steady trading below it has previously coincided with prolonged downturns rather than brief corrections. While Martinez did not predict an immediate crash, there is a growing downside risk if Bitcoin fails to reclaim this level in the coming weeks. Adding to the cautious outlook, CryptoQuant said Bitcoin appears to be in the later stage of its post-ATH correction. As such, weak demand continues to limit rebound attempts. Market sentiment remains in “Extreme Fear,” and risk appetite has yet to recover meaningfully. Despite ongoing inflows into spot Bitcoin ETFs during a record year for the broader ETF market, price action has remained muted. The Coinbase Premium Index has stayed negative, as US-based spot demand remained low, while whale inflows to major exchanges have slowed, which indicates limited large-scale accumulation. The analytics platform also observed increased activity from 7-10-year-old coins. Interestingly, this pattern is often seen near distribution phases or ahead of trend transitions. The possibility is a continued consolidation with a mild bearish bias unless demand indicators show an improvement. Isolated Trading Pair Glitch Instead of delivering a year-end Santa rally, Bitcoin experienced a brief but dramatic price anomaly. On Binance, Bitcoin momentarily plunged to $24,111 on the BTC/USD1 trading pair before rebounding above $87,500 within seconds, as per exchange data. The move was confined to the USD1 pair and did not appear across other major BTC markets. USD1 is a recently launched stablecoin tied to Trump family-backed World Liberty Financial (WLFI), and the pair later stabilized. Experts say that this was a liquidity event with no change in fundamentals or any mass liquidation. Alphractal’s Joao Wedson also revealed that such events are more common when the market is in a bearish phase. The post Is Bitcoin Headed for $40,000? Technicals and On-Chain Data Turn Cautious appeared first on CryptoPotato .

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