Bitcoin price is back below $ 55,000 and is unable to sustain its upward trend that led to its inclusion on Coinbase Global’s list. Since then, things have been rejected.
The dip below $ 60,000 has also caused the coin to sink below critical life-saving support levels that have remained untouched since late 2020.
Bitcoin is losing life-saving support for the first time since 2020
Bitcoin and other cryptocurrencies are notorious for their volatility, but this is how they can also generate life-changing prosperity for early investors.
Given the volatility of the emerging speculative asset class, volatility measuring instruments like the Bollinger Bands are particularly effective. If the bands are tightening it will say price moves have been sideways and a big step is ahead.
Related reading | “Exponential decay” of the dollar to the long-term benefits of Bitcoin
When coins close a candle outside of the volume bands, there is often an opportunity to “ride the bands” for incredible profits.
This is exactly what happened, which brought Bitcoin from under USD 12,000 to over USD 64,000 in just a few months. The Bollinger Bands got tight, began to expand, and with the top cryptocurrency trading above the middle SMA, the bull market was cleared for launch.
The problem is that the same signal is back but vice versa.
More than 190 days of upward trend have passed. Is it time for a change? | Source: BTCUSD on TradingView.com
What the Bollinger Bands are saying about the current crypto cycle
More than six months and around 200 days have passed since Bitcoin passed the mean SMA of the Bollinger Bands within three days.
The Bollinger Bands themselves – created by John Bollinger – are a standard deviation of the simple moving average. They expand and contract due to volatility as mentioned earlier.
The toolset can tell traders a lot about what’s going to go down soon. For example:
The structure looks fine, but we need confirmation first. A number of tactics could be to start and add a position here as this works with an initial stop below the 9/23 low.
– John Bollinger (@bbands) October 5, 2020
According to the tool, the Bitcoin price could go down. Going through the Mid-BB can be used as an effective buy or sell signal. After several candles below the SMA have closed, a fall on the lower Bollinger Band is the most likely next target.
That target is around $ 46,000 per BTC at the height of the “Elon Musk” candle.
Remember that the closing price for Bitcoin is only for the three-day period, which suggests that the more dominant bull trend is still continuing. During the past bull markets, the top cryptocurrency has always been traced back to the middle SMA in weekly periods. That level is around $ 44,000.
Two potential targets for Bitcoin are identified by the SMA | Highlighted source: BTCUSD on TradingView.com
Either that holds up strong or there is a chance the bull market is over. The only line left for the bulls to keep hope alive would be the same mean SMA over the monthly timeframe.
The median SMA per month is around $ 18,000 per coin, below the cryptocurrency’s previous all-time high. A drop of this magnitude would be a shocking 70% drop, comparable to the June 2019 drop on Black Thursday last year.
Related reading | Potential island reversal leaves Bitcoin bulls stranded
For Bitcoin, that’s not impossible, and the bull run would still be intact. Are you ready for the volatility that the Bollinger Bands are warning about?
Featured image from Pixabay, charts from TradingView.com