Bitcoin’s Chart Signals Bearish Setup That Previously Came Before Major Price Drops

Bitcoin is showing a technical warning that resembles the formations seen ahead of its sharp February and June sell-offs. The latest concern centers on the Guppy Multiple Moving Average (GMMA), which indicates that bearish momentum may be spreading from short-term traders to longer-term investors.

Despite the weakening chart structure, historical market patterns provide a counterpoint. Bitcoin has often performed well around this time of year, while previous US midterm elections have generally been followed by gains.

Developed by trader Daryl Guppy, the GMMA indicator uses two sets of moving averages to evaluate market sentiment across different timeframes. The shorter-term group tracks trader behavior, while the longer-term group reflects investor positioning.

Bitcoin’s daily price has moved below both sets of averages, with the short-term group also falling beneath the longer-term one. This crossover suggests traders are increasingly favoring selling over buying.

Longer-Term Investors Also Show Signs of Weakening Confidence

The crossover becomes more significant when the longer-term moving averages begin moving in the same direction as the shorter-term group.

That pattern is now appearing on Bitcoin’s chart. The red lines representing the longer-term averages are tightening and starting to slope downward, suggesting investors are becoming less aggressive in supporting current price levels.

The alignment between the two groups indicates that selling pressure may be extending beyond short-term trading activity.

However, a GMMA crossover is not sufficient by itself to confirm a prolonged downturn. Trader sentiment can change rapidly, and previous signals have sometimes failed to produce further losses.

Previous Bearish Crossovers Came Before Major Corrections

Bitcoin displayed a similar technical arrangement in late May, shortly before its price dropped below $60,000 during the first week of June.

An earlier crossover in late January was also followed by a substantial decline, with BTC falling from roughly $90,000 to approximately $62,000.

Still, the indicator has produced false warnings. Bearish confirmations in August and September 2025 were followed by upward price reversals, showing that the GMMA does not always predict the next market move correctly.

ETF Withdrawals Add to Bitcoin’s Downside Risks

The latest bearish chart formation is accompanied by weaker US demand indicators. Bitcoin exchange-traded funds have experienced significant outflows, while options-market activity shows growing demand for protection against potential price declines.

These developments indicate that investors may be cutting their exposure or positioning for further market weakness.

Yet seasonal factors offer a contrasting outlook. Historical data suggests Bitcoin tends to strengthen during this period, and its performance following previous US midterm elections has generally been positive.

The market is therefore facing competing signals. Whether selling pressure intensifies into another major correction or seasonal and post-election trends support a rebound may become clearer over the next several sessions.