Bollinger calls for caution in the Bitcoin market.
In a tweet on Wednesday, John Bollinger reveals that he has been quiet about the crypto markets because the dynamics keep changing, expressing his point by highlighting recent Bitcoin price action.
“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.
We are still trading systems while watching 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, clarifying what he meant by an unusual resolution, explains that a Bollinger Band squeeze usually leads to increased volatility. However, in the case of Bitcoin, five days of tightly-ranging price action followed.
"What do you mean by "unusual resolution"?"
Normally, a Squeeze results in a expansion of volatility, not five days in a super tight range.— John Bollinger (@bbands) August 24, 2022
When asked if it was a good sign, Bollinger noted that he was not sure but urged traders to exercise caution in the markets. “I wish I knew. All I do know is that there is lots of change in trading dynamics across a host of vehicles and one needs to be quite careful,” the analyst responded.
I wish I knew. All I do know is that there is lots of change in trading dynamics across a host of vehicles and one needs to be quite careful.
— John Bollinger (@bbands) August 24, 2022
Notably, while refraining from saying so with certainty, the famous inventor of the Bollinger bands noted that the market looks like it is forming a price bottom.
Unrealized Expectations And Outlook
It is worth noting that the crypto market in 2022 has not moved as many expected. At the peak of the bull run in 2021, several pundits predicted that Bitcoin would tap the $100k price point in Q1 2022. However, Bitcoin has since crashed by over 70% from its peak in early November.
The current bear market has been attributed to the challenging macroeconomic conditions combined with the collapse of crypto ecosystems like Terra, which led to a domino effect that saw several crypto lending firms collapse.
It is worth noting that while bear cycles are regular in the crypto market, the current bear market is quite different. Market analyst Justin Bennett in July noted that it is the first time the crypto market is facing macroeconomic inflation and recession concerns. Bennett emphasized that applying metrics from previous bear cycles to the current bear market is dangerous without a severe reevaluation.
While several analysts have refrained from explicitly calling the bottom, most agree that it is close. Bitcoin is trading at the $21,716.54 price point, up 1.53% in the last 24 hours.
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