The largest cryptocurrency fell as much as 4.4 per cent Thursday to $46,588, with other tokens including Ether retreating along with the Bloomberg Galaxy Crypto Index. The drop pared Bitcoin’s rally since a July low to some 60 per cent.
John Bollinger, inventor of Bollinger bands, in a tweet suggested taking some profits or hedging. Katie Stockton at Fairlead Strategies cited DeMark market-timing indicators as flagging about two weeks of “sideways-to-lower” prices.
Two charts help sum up the current situation for Bitcoin.
Narrowing Bollinger bands indicate the Bitcoin rally is flagging and that the virtual currency faces a zone of resistance from $50,000 to $51,000. A key threshold to watch is the middle line of the Bollinger study at about $46,700.
Time to pay attention: $BTCUSD Watch carefully, maybe take some profits or hedge a bit… Aggressive traders can think about putting out some shorts. Hodlers can look can look at add at lower levels if we see them. No confirmation yet, just be on the alert. #Bitcoin
— John Bollinger (@bbands) August 24, 2021
Point and Figure
A so-called point and figure analysis — which spotlights the direction of prices without a time dimension — signals Bitcoin faces a challenge to scale levels around $50,940 on a closing basis. A failure to breach the 45-degree trend-line of the point and figure chart could strengthen the bearish case.