With the price of Bitcoin falling to the low range of $ 40,000, the debate has intensified whether the cryptocurrency’s bull run that was once a trend is over. However, it cannot be said for sure, this time it is very different from the last bull market.
Why? Because the price of Bitcoin has just lost a key level that never saw a weekly close below during the last market cycle. Could this be because of the bullish momentum, long before the predictions of $ 100,000 or more per coin are hit?
The crypto cycle could conclude with the loss of a key level of past trends
Cryptocurrencies are a highly speculative asset class, regardless of whether adoption is picking up or not. Sure PayPal is now a game, as is Visa and a variety of others, but volatile assets have a long way to go to discover prices.
Although the newer crypto participants have only known “always up” as the direction of the trend, things have taken a turn to the downside recently.
BTC has lost the middle Bollinger band or the 20-week SMA | Source: BTCUSD on TradingView.com
But is this “the top”? It is difficult to say. However, one thing is for sure is that the price of Bitcoin has now lost the middle Bollinger band, also the 20-week SMA.
Going through the BB medium itself can be a powerful buy or sell signal.
Related reading | Bitcoin Dominance Drops To Its Lowest In Years, Altcoin Season Is Finally Here
However, the fact that during the last weekly Bitcoin bull run it never closed below it, it could be a sign that the bull market structure has been broken.
Not once was there a significant weekly close below the average BB | Source: BTCUSD on TradingView.com
Will the price of Bitcoin return to a bullish phase? What to look for
Bollinger Bands are a tool created by the legendary trader John Bollinger. The tool has a variety of uses, namely measuring the volatility in the price action of assets like Bitcoin.
The technical analysis indicator consists of a 20 session SMA as mentioned, and two standard deviations of that moving average that widen and contract based on volatility.
When they squeeze or “squeeze”, it can be a sign that a massive movement is coming. These big moves can start or continue a trend after a long pause.
Recent peak has more similarities to 2018 and 2019 than to 2017 | Source: BTCUSD on TradingView.com
Bitcoin’s weekly timeframes have tightened during the recent consolidation phase and a breakout has started. However, the direction seems to be declining according to the middle Bollinger band. Passing through the middle band usually results in several hits from the lower band to find support.
Like the last big “highs”, the lower bands widened to the extremes, but when they began to tighten, the trend ended. A rounding of the upper bands is also a sign that the tools are suggesting a break in the bull run.
Related reading | All about Bollinger bands
As for when Bitcoin is ready to turn bullish again, it might be worth waiting for the cryptocurrency to claim the middle BB, which was Black Thursday and now, it has always been a sign of a bullish rally in the making.
With Bitcoin now below the key level, the case for a bearish phase, however, is now just as strong.
Featured Image from iStockPhotos, Graphics from TradingView.com