Bitcoin (BTC) has fallen to a two-month low as CoinDesk’s Bitcoin Index turns neutral

The top cryptocurrency by market cap fell to $26,160 before press time, hitting its lowest level since March 17, according to CoinDesk data. Prices are down more than 12% since May 6, separate from an uptick in traditional risk assets like the Nasdaq.

The BTI Index, which measures the trend momentum and strength of Bitcoin’s price, flipped from bullish to neutral on Thursday. The indicator has consistently indicated an upward trend since January 13th, except for a short red flash (downtrend signal) in mid-March and a neutral reading on April 24th.

According to Matthew Dibb, chief investment officer at Astronaut Capital, it appears that the drop in liquidity has helped a few sellers push prices down.

“There appears to be ‘weak on paper’ liquidity right now, even across major currencies like bitcoin. While we can’t point to a direct reason for the weakness, any medium to large offerings push the market back,” Dipp said.

Liquidity or market depth has recently worsened on major exchanges, including Binance, making it difficult for traders to execute large orders without affecting prices.

According to Dick Lo, founder and CEO of quant trading firm TDX Strategies, the downtrend could intensify if traditional risk assets decline.

“We could get an acceleration to the downside if US stocks also start to roll,” Lu told CoinDesk. “$25,200 is the main support for Bitcoin, followed by $23,100 on potential downside acceleration.”

Lu added that the bearish bias would be invalidated if prices rose above $28,500.

As analysts warned last week, Bitcoin’s drop to two-month lows has confirmed a bearish head and shoulders reversal pattern on the technical charts. The crash opened the door for a deeper slide towards the support around $25,000.