Bitcoin Flashes Rare Signal That Could Trigger Drop Below $40,000, Analyst Warns

Bitcoin (BTC) recently closed its June monthly candle above $100,000, raising hopes among bulls for continued upside throughout the summer.

However, the digital asset has now flashed a rare signal that warns of a significant price pullback in the coming months.

Bitcoin Flashes Rare Bearish Signal According to a recent X post by seasoned crypto analyst Ali Martinez, Bitcoin has triggered a Tom Demark (TD) Sequential sell-signal on the quarterly chart.

Martinez noted that this is a rare and historically reliable warning that has often preceded major drawdowns for the cryptocurrency.

For the uninitiated, a quarterly TD Sequential sell-signal is a rare technical indicator that appears after multiple consecutive bullish quarterly candles, signaling long-term trend exhaustion.

It suggests that Bitcoin may face a significant correction after a prolonged uptrend.

In 2015, its appearance was followed by a 75% decline in BTC, while in 2018, a similar signal preceded an 85% crash.

Martinez cautioned that if the current signal plays out similarly, Bitcoin could fall as low as $40,000 – a potential 64% drop from current levels.

However, not all analysts share this bearish outlook.

Fellow crypto analyst CryptoGoos interpreted Bitcoin’s quarterly close as bullish.

He disputed comparisons with the 2021 double-top pattern and suggested that market structure remains strong.

BTC Looking Ready For New High? Despite the bearish TD Sequential sell-signal, several analysts remain confident that a new all-time high (ATH) is on the horizon.

Analyst Jelle pointed out that BTC has broken out and successfully re-tested a 3-day bullish pennant, making it look “ripe for liftoff.” In another post, Jelle noted that if BTC decisively breaks above $110,000, its next target could be $130,000. For reference, BTC’s current ATH is $111,814, recorded on May 22. Meanwhile, Merlijn The Trader highlighted a bullish technical setup on BTC’s daily chart.

He pointed to a breakout from a falling wedge, followed by the formation of a bull flag – two strong continuation patterns.

He stated: Two of the strongest continuation patterns back to back. $140K is not hopium.

It’s the projection.

Strong hands are positioning now.

Bitcoin doesn’t wait.

The breakout is inevitable.

Additionally, Bitcoin’s weekly RSI continues to move toward the upper trendline – a pattern that has historically coincided with BTC reaching new highs.

At press time, BTC trades at $109,438, up 2.9% in the past 24 hours..