Bitcoin’s recent rally may be nearing exhaustion, as technical indicators suggest a steep downturn could be ahead. On the weekly chart, the Average Directional Index (ADX) has stalled at 28, signaling waning momentum. A reading above 30 usually confirms strong trends, but the sideways move raises red flags.
More concerning is the formation of a rising wedge pattern—a historically bearish structure. The upper line connects swing highs since March 2023, while the lower line traces higher lows since August 2024. As the two converge, the likelihood of a downside break grows.
Additional indicators reinforce the bearish outlook:
- Relative Strength Index (RSI): Peaked at 87.75 in March 2023, now forming lower highs and lows.
- Percentage Price Oscillator (PPO): On a persistent downtrend, confirming weakening price strength.
- Bearish Divergences: Both RSI and PPO trends diverge from Bitcoin’s price rally.
Based on the wedge’s widest distance, technical projections point to a potential decline toward $60,370, representing a 46% drop from current levels. A sustained move above $125,000 would invalidate this outlook, as it would break the wedge’s structure.
Powell’s Speech May Drive Volatility
The catalyst for a sharp move could come from the Jackson Hole Symposium, an annual gathering of central bankers and economists. Investors will watch Federal Reserve Chair Jerome Powell’s address on Friday for clues on interest rate policy.
Markets are increasingly split on the Fed’s path. Inflation has shown signs of persistence, partly fueled by renewed tariffs from the Trump administration. At the same time, unemployment is creeping higher, raising fears of stagflation.
Key scenarios for Bitcoin:
- Dovish Fed (rate cuts signaled): Could extend crypto’s recent rally.
- Hawkish Fed (rates unchanged): Likely to accelerate the bearish breakdown forecast by wedge patterns.
The balance between inflation management and political pressure from the White House complicates Powell’s stance. Traders expect any hint of prolonged high rates to act as a trigger for risk-off sentiment, with Bitcoin especially vulnerable.
Broader Market Context
Bitcoin is not moving in isolation. The crypto market has rallied recently on expectations of looser U.S. monetary policy. But such gains remain fragile, particularly as speculative assets often amplify moves tied to central bank decisions.
If Powell confirms a cautious outlook at Jackson Hole, it could reinforce the wedge-driven bearish thesis. Conversely, a surprise dovish shift may offer Bitcoin temporary relief—but only a decisive break above $125,000 would negate the long-term downside risk.
