History Repeats Itself: The Unfolding of an All-Too-Familiar Bitcoin Scenario

More investors turn bearish as key Bitcoin EMAs cross—but smart money is quietly buying the dip.

The crypto market mood is shifting. More people, including prominent influencers, are turning bearish. Why? One big reason: the Bitcoin bull market’s exponential moving averages (EMAs) have just crossed over again—a technical signal last seen in April 2022, before a harsh bear phase kicked off.

This article breaks down what this crossover means, why history might repeat itself, and why some major players are still stacking Bitcoin. You’ll learn the context behind this signal, why the U.S. dollar’s decline fuels Bitcoin’s case, and the risks that lie ahead. Whether you’re cautious or bullish, this setup demands a reasoned perspective.

What Does the Bitcoin EMA Crossover Signal?

Exponential moving averages (EMAs) are a popular technical indicator that smooths price data, giving more weight to recent prices. When a short-term EMA crosses below a longer-term EMA, it often signals bearish momentum.

The last EMA crossover happened in April 2022, just before the collapse of Ankor Protocol—a major crypto lending platform. That event triggered a domino effect, causing other lending firms like Celsius, BlockFi, and Voyager to fail, deepening the crypto winter.

Investor Takeaway

• The current EMA crossover is a classic warning sign. It often marks the start of a bear market or a significant correction.
• Past bear markets have triggered deep selling and forced liquidations.
• However, markets evolve. This crossover’s signal should be viewed with fresh eyes, accounting for new players like institutional investors.

How Is This Bull Market Different from Previous Cycles?

Unlike past cycles, this Bitcoin bull market showed unusual behavior:

• The bear market low dropped below the previous all-time high, a first in Bitcoin’s history.
• Bitcoin hit new all-time highs post-halving, defying conventional patterns.
• Institutional players like BlackRock and Wall Street giants have entered the space, quietly buying Bitcoin despite bearish headlines.

Why It Matters

Smart money’s involvement suggests this cycle isn’t about pure retail hype. Their buying activities could provide a floor for Bitcoin prices, absorbing some selling pressure.

Declining US Dollar: Why Bitcoin Gains Appeal Now

The U.S. dollar (USD) has weakened notably over the past two decades:

• In 2001, the USD accounted for 65% of global foreign currency reserves.
• Now, it’s down to around 40%, with nations diversifying away from USD reserves.
• Roughly 80% of all US dollars in existence were created in the last five years.

The U.S. government burns about $26 million every 10 minutes just in interest payments on the national debt—about $44,661 every second. This massive money printing devalues the dollar, which erodes the purchasing power of savers.

Legendary investor Warren Buffett recently warned governments naturally devalue their currencies over time, an observation reflecting current U.S. monetary policy’s unease.

Why Bitcoin?

Bitcoin’s fixed supply of 21 million coins offers a hedge against inflation and dollar devaluation. As the dollar weakens, Bitcoin becomes more attractive as an “exit” asset, especially to institutional investors and even some nations.

What Could Go Wrong? Risks to Consider

• Historical precedent: The last time EMAs crossed in April 2022 led to a severe bear market triggered by a major protocol collapse.
• Regulatory risks: Governments are eyeing stablecoins and considering digital currency rollouts that could disrupt crypto markets.
• Market psychology: Widespread bearish sentiment can trigger panic selling, deepening corrections.
• Liquidity shocks: If large institutions suddenly sell, price volatility could spike sharply.

Still, many investors are betting on dollar weakness and institutional demand to support prices in the medium term.

Data Callout

US Dollar Decline: The U.S. dollar index (DXY) recently hit fresh four-year lows. Historically, such weak dollar periods have preceded major liquidity surges and parabolic crypto rallies—as seen in 2020-2021. ---

Answer Box

Q: What does the recent Bitcoin EMA crossover indicate for investors?

A: The crossover of Bitcoin’s exponential moving averages is a bearish technical signal that historically marks the start of a downtrend or bear market. However, current market conditions—such as institutional buying and a weakening US dollar—add complexity and could temper traditional patterns.

Actionable Summary

• Bitcoin’s recent EMA crossover warns of potential bearish momentum ahead.
• The last similar crossover in April 2022 preceded major collapses in crypto lending platforms.
• This bull market differs by institutional players entering and buying Bitcoin quietly.
• The weakening U.S. dollar makes Bitcoin an attractive inflation hedge.
• Risks include regulatory shifts, market panic, and liquidity events that could intensify volatility.

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FAQ

Q1: What is an EMA crossover in crypto trading?
EMA crossover happens when a short-term exponential moving average crosses above or below a long-term EMA, signaling a potential change in price momentum. A bearish crossover often warns of downtrends.

Q2: Why did Bitcoin’s last EMA crossover in April 2022 lead to a big crash?
It coincided with the collapse of Ankor Protocol, causing contagion in lending platforms and shakeouts in the broader crypto market.

Q3: How does a weak US dollar impact Bitcoin prices?
A weaker dollar inflates currency supply and reduces savings’ value, pushing investors toward scarce assets like Bitcoin as inflation hedges.

Q4: Should I sell Bitcoin now because of bearish signals?
Not necessarily. While signals suggest caution, institutional buying and macro trends could support Bitcoin’s value. Many investors choose to hold or dollar-cost average.

Q5: What role might government-issued stablecoins play?
Central banks aim to introduce their own stablecoins, potentially reshaping the financial ecosystem. This could increase regulatory scrutiny but also reinforce demand for privacy-focused coins like Monero.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets are volatile and involve risk. Always do your own research and consult a financial advisor before investing.

By Wolfy Wealth - Empowering crypto investors since 2016

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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile