A widely followed crypto analyst is predicting an unprecedented bullish move by Bitcoin (BTC) based on two key indicators. Pseudonymous analyst TechDev tells his 419,400 followers on the social media platform X that the total market capitalization of digital assets appears ready for a huge breakout. “The monthly crypto market cap is at its highest […]
The post ‘Historic Move’ Ahead for Bitcoin With BTC Setup Looking Stronger Than 2020, Says Crypto Analyst appeared first on The Daily Hodl.
Bollinger Bands are volatility indicators utilizing price bands. Traders buy near the lower band and sell near the upper band.
A technical analysis tool called Bollinger Bands uses price volatility to provide probable entry and exit opportunities in trading. They are made up of two outer bands or lines and a centerline (the simple moving average for a 20-day period), which enlarges and contracts in response to changes in price. For thorough market analysis, they are frequently utilized in conjunction with other technical indicators.
Bollinger Bands were created by John Bollinger in the 1980s. They are a useful technical analysis tool used in cryptocurrency trading and other financial markets to evaluate price volatility, pinpoint probable reversal points, and make trading decisions.
The three bands that help construct a Bollinger Band include:
The upper band is created by multiplying the middle band by the price’s standard deviation. A price’s volatility is quantified by the standard deviation. Traders often use a multiplier of 2 for the standard deviation (SD), but this can be changed depending on the state of the market and personal preferences.
The middle band typically represents the price of the asset over a given period as a simple moving average (SMA). It serves as the axis and depicts the average price of the cryptocurrency within the selected time frame.
From the middle band, a multiple of the standard deviation is subtracted to determine the lower band.
In cryptocurrency trading, Bollinger Bands serve as a crucial technical analysis technique that allows traders to:
Traders can assess the degree of price volatility in the cryptocurrency market using Bollinger Bands. When the bands widen, there may be trading possibilities because it suggests higher volatility. On the other hand, a contraction of the bands denotes less volatility and the potential for price consolidation or trend reversals.
Bollinger Bands are used to detect possible overbought and oversold scenarios, helping traders identify them. A potential sell opportunity arises when the price reaches or exceeds the upper band, which is a sign that the price is overbought. On the other hand, if the price reaches or drops beneath the lower band, it can be considered oversold, indicating a potential purchase opportunity.
Traders may use Bollinger Bands to ascertain the prevailing trend direction. The price may indicate an uptrend if it constantly moves along the top band. On the other hand, if it frequently touches or remains close to the lower band, it can be a sign of a downtrend.
Bollinger Bands can be used to create reversal signals, which are indicators of possible trend reversals. For instance, a possible reversal from an overextended condition may be indicated when the price moves outside the bands and then reenters (below the lower band for a downtrend or above the upper band for an uptrend).
The simple moving average and standard deviation are the two basic building blocks of Bollinger Bands and are used in their construction. These bands offer insightful information on price volatility and possible trading opportunities in the cryptocurrency markets.
Here’s a step-by-step guide to constructing Bollinger Bands:
Depending on their trading technique, traders choose a particular time frame for analysis, such as daily, hourly or another timeframe. For the selected time frame, previous closing prices for the cryptocurrency under examination are gathered. Since it indicates the last traded price at the conclusion of each time period, the closing price is frequently employed.
By adding up the closing prices for the chosen time period and dividing the total by the number of data points, the SMA is calculated. For instance, if traders were examining a cryptocurrency’s daily closing prices over a 20-day period, they would add up the closing prices from the previous 20 days, divide by 20, and then find the SMA for that day.
Traders determine the standard deviation of the closing prices during the same time period after computing the SMA. The standard deviation, which is crucial for assessing price volatility in cryptocurrency markets, quantifies the dispersion or variability of prices from the SMA.
The higher Bollinger Band is created by multiplying the SMA by the standard deviation. A typical multiplier is 2, although (as mentioned) this can be changed depending on the preferences of the traders and the state of the market. The same multiple of the SD is subtracted from the SMA to arrive at the lower Bollinger Band.
Traders can plot the SMA, standard deviation, upper Bollinger Band and lower Bollinger Band on a price chart after calculating them. The centerline of the Bollinger Bands and the SMA is represented by the middle line. Plotting the upper and lower bands above and below the SMA creates a channel that encircles the price chart.
To understand how to use Bollinger Bands to trade cryptocurrencies, it is vital to interpret the price signals. For instance, when the price reaches or swings outside the upper band, it may signal an overbought condition and an opportunity to sell.
On the other hand, if the price touches or swings outside the lower band, it can be a sign that the market is oversold, presenting a potential buying opportunity. The bands’ breadth provides information on market volatility; broader bands denote higher volatility, while narrower bands denote lesser volatility.
Various crypto trading strategies using Bollinger Bands used by traders include:
The Bollinger Band Squeeze approach is based on the idea that times of low volatility in crypto prices (referred to as a “squeeze”) are frequently followed by periods of high volatility (referred to as an “expansion”). It works as follows:
When trading cryptocurrencies, whether for short-term investments or day trading, Bollinger Bands can be utilized to find the best entry and exit points.
Entry points
When the price reaches or breaks below the lower Bollinger Band, indicating an oversold scenario, traders might seek buy signals. In contrast, they view overbought conditions as sell signals when the price reaches or exceeds the upper Bollinger Band. However, it could be necessary to do more technical investigation and validation.
Exit points
Bollinger Bands can be used by traders to determine when to close out a position. For instance, it may be an indication to take profits if traders are long on a cryptocurrency, and the price is approaching the upper band. In contrast, it might be time to close out the trade if they are short, and the price is getting close to the lower band.
Bollinger Bands are frequently used by traders together with other indicators to complement their trading strategies.
Bollinger Bands and RSI
Combining Bollinger Bands and the relative strength index (RSI) might aid traders in spotting probable reversals. A probable slump may be indicated, for instance, if the price is nearing the upper Bollinger Band and the RSI shows overbought circumstances.
Volume analysis
Bollinger Bands and analysis of trading volume can be used to corroborate price fluctuations. An increase in volume during a Bollinger Band breakout might strengthen the signal’s validity.
Bollinger Bands and moving averages
Moving averages are used in combination with Bollinger Bands by traders to add more context to trend analysis. Bollinger Bands and a moving average crossover approach, for instance, can support the confirmation of trend changes.
Bollinger Bands are a useful tool for cryptocurrency traders, but they also have some drawbacks. Firstly, they might produce false signals during times of minimal volatility or in markets that are moving strongly, which could result in losses. Secondly, traders must utilize other indicators or analysis techniques to confirm trend direction since they do not provide directional information on their own.
The efficacy of Bollinger Bands might also vary across different cryptocurrencies and timeframes. Additionally, unexpected market news or occurrences may result in price gaps that aren’t necessarily reflected in the bands, which may catch traders off guard.
As with any technical indicator, Bollinger Bands must be used by cryptocurrency traders in conjunction with thorough risk management and analysis. To reduce possible losses in the event that transactions go against them, traders should set up explicit stop-loss orders.
Position sizing is also essential; to avoid overexposure, traders should also allocate a certain amount of their cash to each trade. Moreover, risk can be reduced by diversifying among different cryptocurrencies and limiting the percentage of one’s entire capital that can be lost in a single trade.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Finally, Bollinger Bands should always be used in conjunction with other indicators for confirmation, as well as larger market patterns. Long-term success with Bollinger Bands depends on maintaining discipline and following a clear risk management strategy.
BTC price is at a decision point within the context of the Bollinger Bands, but only time will tell whether Bitcoin can muster a breakout, their creator says.
Bitcoin (BTC) could see fresh upside volatility as BTC price strength revisits key levels, a classic metric suggests.
In an X post on Sep. 18, John Bollinger, creator of the Bollinger Bands volatility indicator, said that Bitcoin was positioned for a breakout decision.
After hitting new September highs the day prior, Bitcoin is challenging resistance levels out of reach since mid-August, data from Cointelegraph Markets Pro and TradingView shows.
For Bollinger, the signs from the largest cryptocurrency are encouraging. Bollinger Bands use standard deviation around a simple moving average to determine both likely price ranges and volatility.
Currently, BTC/USD is putting in daily candles which touch the upper band. When this happens, it can signal an imminet reversal back to the center band, or conversely an inbound fit of upside volatility.
Narrow Bollinger Bands seen on Bitcoin recently lend weight to hopes that the latter scenario will now play out.
“And there is the first tag of the upper Bollinger Band after a new set of controlling bars was established at the lower band,” Bollinger commented alongside a chart.
“The question is now can we do a walk up the upper band? Too early to answer.”
Cointelegraph reported on the narrowing of the bands in July — an event which ultimately preceded a return to lower levels.
Bollinger characterizes the current mood among seasoned Bitcoin traders and analysts on short timeframes.
Related: FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week
Despite the strength seen this week, caution abounds as various trendlines, which previously acted as support remain above spot price.
Discussing the situation, on-chain monitoring resource Material Indicators told X subscribers to question bulls’ momentum.
“We have heavy technical resistance overhead at the Key Moving Averages and support at the LL,” part of commentary stated.
“It's quite possible that we round trip the range, and with any luck, we will see legit tests of the R/S levels that will give us some clarity on where BTC goes from here before the end of the week.”
Material Indicators referenced the upcoming United States Federal Reserve decision on interest rates, which could produce snap volatility and untrustworthy short-term trading signals.
UPDATE 2: As noted earlier, it appears #BTC bulls are gaining some momentum, but things are not always as they seem. Let me explain...
— Material Indicators (@MI_Algos) September 18, 2023
Sometime after last nights candle close/open we've seen a new Trend Precognition ⬆️signal develop on the Daily chart and NOW we have a new… pic.twitter.com/V0UI7JznKf
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The Bitcoin Implied Volatility Index has fallen to its lowest levels since the crypto options exchange launched the tracker in early 2021.
Crypto options exchange Deribit's future-looking Bitcoin (BTC) volatility index — used as a crypto fear gauge of sorts — has reportedly reached its lowest level in two years, indicating a possible lack of price turbulence for Bitcoin in the near future.
On July 24, crypto derivatives analytics platform Greeks Live noted that the volatility index for both Bitcoin and Ether (ETH) has fallen to a multi-year low of 37%.
Furthermore, the current implied volatility level has fallen to the lowest level in crypto's history according to the DVOL algorithm, it added.
The Dvol (Volatility Index) for BTC and ETH fell to 37%, the lowest level in history since two years ago, and the current Implied Volatility level, as projected by Dvol's algorithm, has fallen to the lowest level in crypto's history.
— Greeks.live (@GreeksLive) July 24, 2023
Continued low liquidity has severely depressed… pic.twitter.com/GdWE4GHXZw
DVOL is the Deribit Implied Volatility Index. It gives an indication of the expected volatility for a crypto asset over the next 30 days by analyzing option activity. In simple terms, the index can indicate investors' expectations for a crypto's price turbulence.
Greeks Live noted that continued low liquidity has severely depressed implied volatility (IV) levels for Bitcoin.
This suggests that derivatives traders are not confident that there will be any major moves in crypto markets in the short term and the lack of volatility is likely to continue, it said.
“It is an indisputable fact that the overall volatility of cryptocurrencies is declining, which will inevitably force the implied volatility of cryptocurrencies to keep going to new lows.”
Related: Cryptocurrency markets’ low volatility: A curse or an opportunity?
Other analysts using different metrics have echoed the sentiment. On July 24, crypto analyst Josh Olszewicz observed that Bitcoin’s weekly Bollinger Bands had contracted to record levels. “This is officially the tightest bbands [Bollinger Bands] have ever been on the weekly timeframe,” he said.
Bollinger Bands are a type of statistical chart characterizing asset prices and volatility over time which consist of a middle trend line with two outer bands that are two standard deviations away.
Crypto markets have been rangebound since mid-March with total capitalization hovering around $1.2 trillion. There has been very little deviation from this level aside from a brief peak in mid-April and an equally brief trough in mid-June.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Magazine: Should you ‘orange pill’ children? The case for Bitcoin kids books
Ethereum Foundation's previous big sale of ETH preceded a bear market, but there's little evidence that such sales affect the general market trend.
On May 6, Ethereum Foundation transferred nearly $30 million in Ether (ETH) to the Kraken cryptocurrency exchange, causing jitters in the market about a potential selloff event.
ETH price fell 4.8% to $1,900 on the day, but the decline has been negligible so far amid a wider recovery trend.
Ether's price recovered modestly to $1,920 on May 7 after testing its 50-day exponential moving average (50-day EMA; the red wave) near $1,850 as support a day ago.
Moreover, the price volatility dropped on Kraken in the said period, per the contracting Bollinger Bands Width in the chart below. That further shows traders' calm amid the Ethereum Foundation transfer.
Notably, the 50-day EMA has capped Ether's downside attempts so far in 2023, barring the early March selloff that saw the price briefly falling below the red wave. Meanwhile, testing it as support has prompted the ETH price to pursue a breakout above $2,000.
As a result of this support, ETH bulls may attempt to take the price above $2,000 again.
Conversely, a drop below the 50-day EMA could have traders eye a support confluence comprising a multi-month ascending trendline and the 200-day EMA (the blue wave) near $1,700 as the next downside target, down about 13% from current price levels.
Even with a larger decline, ETH would be maintaining its overall recovery trend when measured from its June 2022 bottom of $880.
A rising exchange balance suggests potential selling pressure rising and vice versa. In Ethereum's case, the balance remained lower across all the exchanges despite the Ethereum Foundation's transferring $30 million in to Kraken.
For instance, Kraken's Ether balance increased to 1.84 million ETH on May 6 from 1.83 million a day ago.
Nevertheless, the balance across all exchanges actually dropped to 18.15 million ETH from 18.22 million ETH on the day, indicating that any potential sell-pressure from the Ethereum Foundation can easily be absorbed.
The Ethereum Foundation's last big transfer was 20,000 ETH in November 2021, when the price topped around $4,850, and declining 80% thereafter. Similarly, the foundation sold 35,053 ETH at the local market top of around $3,500 in May 2021.
Related: Ethereum up 20% in April while Markets Pro sees 379% gain in one day
Many analysts treated these fractals as a sign of another possible market top formation near $2,000, arguing that the price may fall in the coming sessions.
Ethereum Foundation sold another 20,000 Ethereum at the recent local top.
— Brad Mills ⚡️ (@bradmillscan) January 28, 2022
Every time the eth foundation / Vitalik / Consensys dumps a massive presale bag it marks the top.
What’s the difference between ripple dumping hundreds of millions on retail vs ETH founders doing it? https://t.co/pw8ukMiR8v
But broader data suggests otherwise. For instance, Ethereum Foundation's large ETH sales occurred also during the 2020-2021 bull cycle, boosted by growing demand for risk-on assets in a lower interest rate macro environment.
In other words, there's little evidence to suggest that the Ethereum Foundation's sales have any impact on Ethereum's price trend. Instead, the cryptocurrency market is currently taking cues from the U.S. banking crisis and whether this will force the Federal Reserve to stop hiking and cut interest rates.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
BTC price action is shaping up to repeat a rare Bollinger Bands breakout which only happens once per halving cycle, data suggests.
Bitcoin (BTC) could be set for historic gains thanks to a simple trend line breakout, a popular trader hopes.
In a Twitter discussion on May 5, Titan of Crypto flagged a rare bull signal on the Bollinger Bands indicator for the Bitcoin monthly chart.
BTC price action currently impacts sentiment in different ways across various timeframes. While observers are unsure about short-term moves, zooming out, consensus remains that Bitcoin’s upside mostly lies ahead as the block subsidy halving approaches.
When it comes to tracking what comes next, however, it may be enough to look at halving cycles past — specifically, volatility.
As Titan of Crypto notes, Bollinger Bands on monthly timeframes are setting up a repeat of a breakout event that has occurred only once in each cycle.
In the two previous instances shown on an accompanying chart, 2016 and 2019, BTC/USD broke through into the upper section of the Bollinger Band channel to see significant gains.
Bollinger bands are a key volatility indicator across price timeframes. They revolve around a 20-period simple moving average (SMA) functioning as a midline, with two standard deviations above and below representing the channel.
These bands expand and contract with volatility, and certain events, among them price coming into contact with the bands or even breaking beyond them, are often considered important by traders.
Currently, the one-month BTC/USD chart shows price attempting to break above the SMA line, something which, if confirmed, would suggest a classic repeat of past bull runs.
Commenting, Titan of Crypto described it as an “inexorable breakout.
”BTC is about to break its monthly Bollinger Bands base line. And when that happens 1st target will follow inexorably,” he added.
“That would bring Bitcoin to a solid $63,500.”
While not quite enough to match its current all-time high, the price target could come around the point of the halving in one year’s time. How long it will need in reality remains to be seen, Titan of Crypto acknowledged.
Last month, meanwhile, John Bollinger, the bands’ creator, himself argued that Bitcoin was at a crucial point on daily timeframes.
Related: Is Bitcoin overbought or oversold? Use Bollinger Bands to find out!
At the time, price was retesting the SMA line as support, subsequently breaking through to range around it. Now, however, it is heading higher toward the upper band, data from Cointelegraph Markets Pro and TradingView shows.
Subsequently, analyst CryptoCon suggested that low-timeframe Bollinger Bands norms were still intact despite Bitcoin's comedown from local highs of $31,000.
Even with the last drop in #Bitcoin price, this time is still not different for the Bitcoin 3 Week Bollinger Bands!
— CryptoCon (@CryptoCon_) April 29, 2023
Large corrections have always taken place after the upper parameter is met AND exceeded, but not a moment before
The price of the upper band is still $35,790 pic.twitter.com/kQol55Ovmh
Magazine: Crypto audits and bug bounties are broken: Here’s how to fix them
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The Bitcoin Bollinger Band "squeeze" is not a firm indicator of a breakout, says the metric's creator.
Bitcoin (BTC) traders are desperate for fresh BTC price volatility, but opinions are diverging on when it will come.
BTC/USD is currently seeing some of the least volatile conditions in its history, price metrics show.
Since the FTX crisis, Bitcoin has settled into a historically narrow trading range which refuses to budge.
Despite macro triggers, low-volume holiday trading and a yearly candle close, BTC price action has stuck rigidly to a zone focused on $17,000.
This is the least volatile period in the history of the Bitcoin historical volatility index (BVOL), and other data likewise shows that such sideways behavior is extremely rare.
Two months after FTX, traders and analysts alike are hotly debating when the breakout will come for BTC/USD — and in which direction it will go.
“A big move is brewing for Bitcoin,” Charles Edwards, founder and CEO of asset manager Capriole Investments, stated on Jan. 5.
“Bitcoin is currently trading at a major low in volatility. Generally, when Bitcoin breaks out of extremely low volatility, the ensuing trend tends to last. Don’t fight the trend on the next major move.”
An accompanying chart showed the 30-day annualized standard deviation of Bitcoin volatility, this now at lows seen only a handful of times in the past five years.
Equally convinced that the status quo will break is “Wolf of All Streets” podcast host Scott Melker, who this week flagged what he described as the “tightest” Bollinger Bands he had ever seen on the daily Bitcoin chart.
Bollinger bands are a classic volatility indicator in action since the 1980s. They likewise use standard deviation to determine upper and lower bounds of price action within a defined period. Multiple use cases arise, including the ability to assess comparatively volatile or nonvolatile price action, as well as associated entry and exit points.
Currently, the two bands are “squeezed” around the central moving average on BTC/USD, data from Cointelegraph Markets Pro and TradingView shows, leading to assumptions that volatility should now ensue.
For creator John Bollinger, however, the length of the squeeze is not necessarily pertinent to the timing or strength of future volatility.
“In my experience prolonged Squeezes are rarely valuable signals. I prefer Squeeze and Go!” he responded to Melker.
As Cointelegraph reported, meanwhile, there is no shortage of bearish BTC price predictions in force at the start of 2023.
Related: $16.8K Bitcoin now trades further below this key trendline than ever
Various warnings have cautioned hodlers over what may be to come, these including a drop to $10,000 or even lower in Q1.
Hopes of upside are comparatively muted as analysts look to see what will happen with United States macroeconomic policy and its influence on risk assets.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
In recent times bitcoin’s volatility has been the lowest it’s been since 2020 and after last month’s market downturn, crypto enthusiasts expected a reversal in October. In fact, bitcoin has seen gains in October ten times out of the last 13 years, which has led crypto enthusiasts to call the month “Uptober.” While bitcoin is […]
A popular crypto strategist is predicting what’s next for a trio of digital assets as the markets try to keep the recent rally going. The pseudonymous crypto trader Cheds tells his 274,100 Twitter followers that he’s looking at Bitcoin (BTC) on the 34-day estimated moving average (EMA). He says this is the first time the […]
The post Bitcoin, Ethereum and One Metaverse Altcoin Turning Bullish, According to Closely Followed Trader appeared first on The Daily Hodl.
The AVAX/USD exchange rate slips more than 16% after testing its May resistance level.
The Avalanche blockchain platform's native asset, AVAX, fell on Aug. 19 as traders decided to secure their profits from its 100% upside move.
The AVAX/USD exchange rate plunged more than 16% after hitting a three-month high of $36.64, putting the brakes on a seven-day upside boom that saw its price rise by 111%. It appears that traders felt uneasy about entering AVAX markets near $36 because of its historical reference as a sell-off level, capping AVAX's previous recovery attempts from March to May.
AVAX also dropped on interim overvaluation fears. The daily relative strength index (RSI) of Avalanche's token crossed above 70 during its upside boom. Essentially, markets consider an RSI reading above 70 as overbought for the underlying asset, noting that the price has climbed excessively higher and, therefore, should undergo a correction.
More evidence for AVAX's interim overvaluation appeared when looking at the Bollinger Bands. The indicator consists of a middle band (a 20-period simple moving average) and two outer bands set at two standard deviations below and above the middle band.
When the price overreaches its valuation in the short term, it tends to jump above the upper band. Similarly, slipping below the lower band suggests that the asset is trading below its current valuation. AVAX crossed above the upper Bollinger Band following the latest price rally.
The two indicators were instrumental in predicting recent AVAX price corrections. For instance, during the February rally where AVAX surged over 500% in just two weeks, its RSI and Bollinger Bands both alerted t its excessive interim valuation.
The price wiped off 65% of its gains in the next three weeks to neutralize its overbought status. Its next interim support came at the 23.6% Fibonacci line ($22.29) of the Fibonacci retracement graph drawn between the $63.3 swing high and $9.62 swing low.
The same 23.6% Fibonacci level now serves as the next line of support should the price of AVAX correct following its RSI and Bollinger Bands alerts.
$AVAX Update https://t.co/ZUZ7NlamMA pic.twitter.com/3Y1qTNfySs
— Rager (@Rager) August 19, 2021
The latest bout of AVAX's price boom appeared in the wake of the launch of its $180 million “liquidity mining incentive program” to bring decentralized finance (DeFi) services to its blockchain platform, including lending platform Aave and automated market protocol Curve Finance.
Related: Avalanche Rush to give out more than 180M in DeFi incentives
AVAX's bounce also appeared as a rally in the market of its top rival, Ether (ETH), flattened out. This is because traders tend to rotate capital out of overvalued markets to bet on assets they deem undervalued.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.
