Bitcoin Price Plunge to $40K? Key Indicator Signals Drop, Says Famous Chart Analyst

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After a recent market drop, the largest crypto by market cap Bitcoin (BTC) price has plunged to $56,092, marking a 4% decline over the past week after struggling to break past the $58,000 level. While some traders are hopeful for a bounce back, popular chart analyst Ali Martinez has raised concerns about a potential further drop, pointing to a key indicator that signals more price drop could be on the way.

Bitcoin Possible Drop to $40,600

According to Martinez’s latest analysis, the TD Sequential indicator which is used to identify potential price reversal, on Bitcoin’s 2-month chart has issued a sell signal, suggesting a correction could be on the horizon. 

Martinez highlights that if Bitcoin fails to hold the $51,000 support level, the cryptocurrency could plummet to approximately $40,600. This level of support is crucial, and losing it could trigger a significant drop, impacting traders and investors who are closely watching Bitcoin’s movements.

Echoing a similar bearish outlook, Santiment, a market intelligence platform, has noted that recent drops in Bitcoin’s price have sparked increased talk about a potential “bear market.” Traders are divided on whether this dip is just a shakeout of weak investors or if it signals a further decline, possibly pushing Bitcoin down to $40,000.

Bitcoin Active Addresses Dropped

Adding to the concern, CryptoQuant author “Avocado onchain” observed that Bitcoin’s price isn’t following the usual downturn pattern seen in past cycles. Instead, it’s been moving sideways within a large range without a clear direction.

Moreover, the number of Bitcoin active addresses, which represents the total number of users on the network, has significantly declined since the start of 2024. This pattern mirrors declines observed after Bitcoin’s price peaked in previous bull markets, like those in 2017 and 2021.

Meanwhile, Avocado noted that the sharp drop in wallet activity indicates that people have stopped making transactions and have essentially “locked up” their wallets, signaling a shift to long-term holding.