Bitcoin’s Nasty Breakdown and the Possibility of a Head Fake
Bitcoin recently experienced a significant breakdown, with a 10% intraday plunge. However, this could potentially be a “head fake,” meaning that the price might reverse back above $31,000 in the coming weeks. If not, a more sustained downtrend is also possible. The tightness of the Bollinger Bands triggered this crypto crash, as Bitcoin had been trading around $29,000 for several months, causing record low volatility. The Bollinger Bands setup, known as a Squeeze, occurs when the Bollinger Band Width reaches its lowest reading in the last six months. This could either lead to a bearish market or a head fake.
Key Points:
- Bitcoin suffered a 10% intraday plunge from its range.
- The Bollinger Bands tightened due to low volatility, creating a setup called a Squeeze.
- A head fake could occur where the price reverses higher and generates a breakout signal.
- The next two weeks are critical in determining the “real” emerging trend.
- The possibility of a sustained downtrend also exists.
Hot Take:
The recent breakdown in Bitcoin’s price may not necessarily indicate a sustained downtrend. It could be a head fake, leading to a reversal back above $31,000. The tightness of the Bollinger Bands and the subsequent increase in volatility suggest that a breakout signal could still be generated. The next two weeks will be crucial in determining the true direction of Bitcoin’s emerging trend.
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