Analyst Warns Bitcoin Could Plunge 63% to $40K as Key Technical Indicator Signals Sell

Prominent crypto analyst Ali Martinez has issued a bearish warning for Bitcoin after observing a sell signal from the historically reliable Tom DeMark (TD) Sequential indicator. In a recent post on X, Martinez noted this technical tool — which accurately predicted previous major Bitcoin crashes — has once again flashed red.

'The TD Sequential just triggered a quarterly sell signal, a rare occurrence that historically precedes severe market corrections,' Martinez cautioned. The analyst highlighted the indicator's track record: in 2015, its sell signal preceded a 75% Bitcoin crash, while the 2018 warning came before an 85% plunge.

The TD Sequential identifies potential trend reversals by analyzing intraday price movements, typically signaling when an overextended rally may face a sharp correction. Currently, it suggests Bitcoin could plummet approximately 63% from current levels to around $40,000—a dramatic reversal from recent highs above the psychologically significant $100,000 mark.

The warning comes as Bitcoin recently surpassed $110,000 for the first time since June 11, bolstered by $408 million inflows into U.S. spot Bitcoin ETFs on Wednesday alone. Since May 1, these ETFs have attracted $9.91 billion in new investments, representing about 20% of total inflows since their January 2024 launch, according to Farside data. At the time of writing, Bitcoin traded at $110,295, up 2.4% from the previous day.