The legendary technical analyst, the inventor of the Bollinger Bands, advises to be cautious when trading Bitcoin.
John Bollinger urges Bitcoin investors to beware
John Bollinger claims in a tweet published Wednesday that he has been keeping quiet about the cryptocurrency markets due to the ever-changing dynamics. He illustrates his thesis by pointing to the recent Bitcoin price action. In his analysis dated August 24, Bollinger advises to be cautious when taking positions in Bitcoin:
I haven’t written much about cryptocurrency transactions lately because the dynamics of trading still seem to be changing. Check out the latest BB Squeeze in BTC/USD’s distinctive resolution.
We’re trading systems while keeping an eye on the environment, Bollinger tweeted.
I haven't been posting much on crypto trading recently as it seems that the trading dynamics are continuing to evolve. Witness the unusual resolution of the recent BB Squeeze in $BTCUSD.https://t.co/aiyBV7xQyK
We are still trading systems while watching the environment.— John Bollinger (@bbands) August 24, 2022
Bollinger notes that a Bollinger Band squeeze typically results in higher volatility to understand what he means by “unusual resolution.” However, Bitcoin still fluctuated in a narrow range for five days.
What do you mean by "unusual resolution"? Just look at the chart. We haven't even been able to get a decent bounce since the breakdown of the rising wedge that we just broke out of. This shows that BTC is EXTREMLY week and very likely to go lower. Just use plain simple language.
— Mac (@CryptoMacTrader) August 24, 2022
A positive sign for BTC?
Bollinger is unsure, but when asked if it’s a good indicator, he tells investors to be cautious in the markets. “Is this a good sign?” a Twitter user asked. The expert answered the question as follows:
I wish I knew. All I know is that the trading dynamics are always changing in various instruments and one has to be very careful.
Is that a good sign?
— CoinActuary (@coinactuary) August 24, 2022
The Bollinger inventor specifically stated that the market has developed a price floor, though he refuses to say definitively.
Realized price and outlook
It is important to note that the crypto market has not changed as much in 2022 as many expected. At the height of the bull run in 2021, experts predicted that Bitcoin would surpass $100,000 in the first quarter of 2022. Since early November, Bitcoin has lost more than 70% of its value.
The current bear market started with crashes that started the chain reaction that killed other crypto lending companies. With the demise of crypto ecosystems like Terra, challenging macroeconomic conditions have arisen. Bear markets occur frequently in the cryptocurrency market. But the current market is quite different from the others. Justin Bennett, a market expert, stated in July that this is the first example of macroeconomic inflation and recession concerns affecting the cryptocurrency market. Bennett noted that it’s risky to use data from downturn markets before doing a comprehensive reassessment.
While some analysts do not clearly explain the bottom, most say it is imminent. Bitcoin price is currently trading at $21,678.65, up 1.03% in 24 hours.
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