With Bitcoin price dropping to the low of $ 40,000, debate has increased over whether the cryptocurrency’s one-time bull run is over. It’s not exactly safe, but this time it’s very different from the last bull market.
Why? Because Bitcoin price has just lost a key level that has never hit a weekly closing price in the last market cycle. Could this be the bullish impulse long before forecasts of $ 100,000 or more per coin are ever hit?
The crypto cycle could end with a key level that has been lost from previous trends
Cryptocurrencies are a highly speculative asset class, regardless of whether acceptance increases or not. Sure, PayPal is a game now, as is Visa and a host of others, but volatile assets have a long way to go in pricing.
Though recent crypto participants have only known “always on” as the direction of the trend, things have turned down recently.
BTC has lost the middle Bollinger Band or 20-week SMA | Source: BTCUSD on TradingView.com
But is that “the top”? It’s difficult to say. What is certain, however, is that Bitcoin price has now lost the middle Bollinger Band – including the 20-week SMA.
Going through the mid BB in and of itself can be a strong buy or sell signal.
Related reading | Bitcoin Dominance is at its lowest level in years, the altcoin season is finally here
The fact that the Bitcoin weekly never closed below it during the last bull run could be a sign that the structure of the bull market has been broken.
Never once was there a meaningful weekly close below the mid-BB | Source: BTCUSD on TradingView.com
Will Bitcoin Price Return To A Bull Phase? Look what
The Bollinger Bands are a tool used by legendary trader John Bollinger. The tool has a wide variety of uses, namely measuring volatility in the price movement of assets like Bitcoin.
As mentioned, the indicator for technical analysis consists of an SMA with 20 sessions and two standard deviations of this moving average, which expand and decrease due to volatility.
If they tighten or “squeeze” it can be a sign that massive movement is imminent. These large moves can start or continue a trend after a long pause.
The most recent high is more similar to 2018 and 2019 than 2017 | Source: BTCUSD on TradingView.com
The weekly time frames for Bitcoin have tightened in the last phase of consolidation and a breakout has begun. However, the direction appears to be downwards according to the middle Bollinger Band. Traversing the middle ligament usually results in multiple touches of the lower ligament for support.
As with the previous big “tops”, the lower bands stretched to the limit, but when they tightened again, the trend was over. A rounding of the upper ligaments is also a sign of the tools, indicating an interruption in the bull run.
Related reading | Everything about the Bollinger Bands
When Bitcoin is ready to get bullish again, it might be worth waiting for the cryptocurrency to recapture the middle BB, which was outside of Black Thursday and now always a sign of a bull rally.
With Bitcoin now below the key level, the bear phase case is just as strong now.
Featured image from iStockPhotos, Charts from TradingView.com