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The “Father Of Trend Following” And The Indicator That Says Bitcoin Is Still Bullish

Tony Spilotro by Tony Spilotro
11 months ago
in BTC
Reading Time: 3 mins read
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When Bitcoin price is in an uptrend or a downtrend, it is usually obvious and undeniable due to just how powerful things can move. For example, the cryptocurrency soared from $3,800 to $65,000 during the most recent impulse.

Although there was a large setback, a trend-identifying indicator created by the “Father of Trend Following” suggests that Bitcoin is as bullish as ever, and after a defense of an important conflict line, the cryptocurrency is ready to blast off higher.

The Bitcoin Uptrend That’s Not Yet Ready To End

After Black Thursday in 2020, Bitcoin price went on a year-long uptrend that came to a climax this past April around the same time Coinbase Global (COIN) was listed on the Nasdaq.

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The first ever cryptocurrency climbed more than 1,500% and reached more than a $1 trillion market cap. The correction wiped out more than 60% of it, and left the market reeling enough to question if the cycle had concluded.

Related Reading | What Bear Market? Bulls Now “In Control” Over Every Bitcoin Timeframe

Mixed signals are everywhere, with many pointing toward a bear market, with others are saying the integrity of the bull market was never quite broken. Sideways price action following the selloff has made the current trend a lot less clear.

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However, zooming out using the Donchian Channels technical indicator on monthly timeframes, the uptrend holding becomes a lot more visible – especially when comparing past market cycle tops.

BTCUSD_2021-08-18_12-42-16 bitcoin

After defending the median, bulls should make a push higher causing the upper band to rise | Source: BTCUSD on TradingView.com

All About The Donchian Channels And How To Use Them

The Donchian Channels indicator was created by Richard Donchian in the mid-20th century. He was later nicknamed “The Father of Trend Following.”

The tool itself is used to help identify trends. An asset begins trending after making it through the median which acts as a line of conflict between bears and bulls. Expansion of bullish or bearish energy then causes the channel bands to widen.

Related Reading | Proof-of-Work: Bitcoin Back Programs That Put Your Money To Work For You

The median is best defined as a “mean” that assets return to after a period of trending. A successful defense of the median, typically results in another wave to the primary trend. If that trend is up, like what Bitcoin price is currently showing, then the upper channel should theoretically expand as prices rises higher.

Past bear markets in Bitcoin began when the median was lost, which caused the asset to trend toward the lower channel band instead. And past bull markets each had several pauses in the upper channel before another push higher was made. Could the recent pullback just be the first of many more to come as Bitcoin climbs toward the eventual climax to the current market cycle?

Donchian Channel on the monthly says #Bitcoin still plenty bullish after defense of the median. Donchia-say you weren't warned. pic.twitter.com/LMPwBGR5RP

— Tony "The Bull" Spilotro (@tonyspilotroBTC) August 18, 2021

Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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