Bitcoin is approaching a death cross, a bearish indicator which appears when the 50-day moving average (MA) dips below the 200-day MA.
The chart pattern looks set to be confirmed this week amid concerns of liquidity withdrawal by the U.S. Federal Reserve (Fed).
Goldman Sachs foresees the Fed raising borrowing costs at least four times by the end of 2022.
Goldman Sachs also expects the central bank to downsize its balance sheet from July.
Bitcoin peaked near $69,000 on Nov. 10 and has declined nearly 40% since. The cryptocurrency slipped over 12% in the last seven days to Jan. 9, registering its biggest weekly drop since early December.
The impending death cross, coupled with the souring macro outlook, may bolster overall bearish sentiment.
However, death crosses witnessed in June 2021, late March 2020, and October 2019 were bear traps or false signals that marked major price bottoms. The consolidation seen after the mid-June 2021 death cross resolved in a fresh bull run, Coin Desk recounts.
CoinDesk says moving average crossovers are unreliable as standalone indicators, given they are based on backward-looking data and tend to lag prices.