Bitcoin (BTC) briefly broke above the $30,000 threshold within the last 24 hours, defying declining stock prices and a strengthening US dollar. Still, its stay above this pivotal mark was short-lived, as the cryptocurrency quickly retreated to approximately $29,800.
However, although the leading crypto is already trading in the green, a far greater move may be in the cards, according to a widely-used technical indicator.
What does it indicate?
Bollinger Bands serve the purpose of gauging market volatility and detecting potential shifts in price direction. When these bands contract, they imply reduced market volatility, resulting in narrower price fluctuations.
Furthermore, constricted Bollinger Bands can suggest a phase of consolidation or an absence of a distinct trend. Traders often view this as a prelude to an impending price breakout. As volatility rises, the bands expand, marking the emergence of a new trend or a substantial price movement.
Conversely, traders may also interpret tight Bollinger Bands as an indication of uncertainty or a period warranting careful consideration.
Bitcoin price analysis
At press time on August 9, BTC was trading at $29,774, up 2.17% on the last day.
The maiden cryptocurrency gained 1.15% over the past week while losing around 1.7% on a monthly basis.
As can be observed from the chart, the price of Bitcoin rose above $30,100 at one point in the past 24 hours, before retreating below this psychological threshold.
The upswing came despite a drop in equity prices and a surge in the US dollar. According to blockchain intelligence platform Santiment, Bitcoin transactions are witnessing the highest profit taking in about 3 weeks. Specifically, the ratio of profit-taking versus loss-taking currently stands at 2:1, data showed.
Meanwhile, long-term average trading returns are back above 20%, after sliding below 18% earlier this month.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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