Bitcoin Reaches ‘Logical’ Support As Volatility Wanes, Explosive Move Incoming

Tony "The Bull" Severino

Last Updated: January 23, 2020 9:00 pm

3 mins read

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After Bitcoin price rocketed last month from lows around $6,400, the crypto asset touched over $9,000 before falling lower to what a well-known financial market analyst says is “logical support.”

Meanwhile, a tool designed by the analyst suggests that volatility in the Bitcoin market is reaching bear market lows, potentially signaling that an exceptionally explosive move could be incoming soon.

Bitcoin Volatility Disappears, Explosive Moving Incoming To Shake Things Up Again

Bitcoin and other cryptocurrencies are known and even infamous for their volatility relative to other financial assets.

The increase in volatility is due to the fact the technology is extremely new, hasn’t proven their use case, and is more for speculation currently than anything else.

Volatility can be measured in a variety of ways, but well-known financial market analyst John Bollinger created a technical analysis indicator that measures an asset’s price in relation to the volatility the asset has been experiencing.

The aptly named Bollinger Bands expand and contract as volatility picks up or wanes in an asset like Bitcoin.

https://twitter.com/york780/status/1220148712552509446?s=21

According to a tweaked version of the tool that measures just the width of Bollinger Bands (pictured below), the indicator suggests that Bitcoin’s volatility has dropped so low on weekly timeframes, it’s reaching levels not seen since late September or early October when Bitcoin was ranging before the late October, record-breaking “China pump.”

Before that, volatility reached this low in March ahead of the April 2019 rally breakout.

Volatility could even reach dangerous levels not seen since before Bitcoin’s deep November 2018 drop to $3,000. When volatility drops so low, it often suggests an extremely large move is ahead – one that revives the volatility for days and weeks to come.

Crypto Asset Reaches Logical Support, Says Creator of Bollinger Bands

Even the indicator’s creator, John Bollinger, says that using the tool, it appears that Bitcoin has fallen to “logical support” at the mid-BB line. The mid-BB line often acts as a support for assets that have previously passed through the mid-line.

This is a 'logical place' for $btcusd to find support, a pullback to a breakout level and the middle BB.

— John Bollinger (@bbands) January 23, 2020

Holding above the mid-BB line is critical for Bitcoin’s uptrend to continue. If it falls back below, combined with the reducing volatility, the explosive move that the Bollinger Bands are foretelling could be to the downside.

While a variety of similarities have been pointed out between the current price action and the July 2018 rally in Bitcoin markets, even the Bollinger Bands are exhibiting similar patterns as the 2018 bear market.

In July 2018, Bitcoin couldn’t hold above the mid-BB line (pictured above) and fell back down, then dropping further through support at $6,000 to reach its ultimate bottom. If Bitcoin cannot hold above the mid-BB line yet again, a repeat of the disastrous drop could be next.

However, if Bitcoin can hold, this time would indeed be different and could lead to a retest of the top Bollinger Band.

Featured image from Shutterstock

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.