The establishment of the Strategic Bitcoin Reserve did not fulfill the high hopes of many participants in the cryptocurrency market. In fact, the leading cryptocurrency ended this week down 10.66% from its initial valuation.
What lies ahead for Bitcoin (BTC)? Anyone claiming to have a definite answer would be misleading.
Nevertheless, there is a way to at least set expectations, and these are indicators, one of which is Bollinger Bands. This well-known tool, developed by John Bollinger, has long been a standard for various financial assets, and BTC is no exception.
Comprising three curves, or bands, this indicator illustrates a range of movements that aid traders in assessing whether the asset is oversold or overbought. Moreover, it helps identify the prevailing sentiment towards the asset and pinpoints potential critical price levels.
Bad and worse
For Bitcoin, the message conveyed by the Bollinger Bands is quite clear—and not in a favorable light. Observing the cryptocurrency’s daily chart reveals that Bitcoin is currently trapped between the middle band and the lower band, which sits above the $80,411 threshold.
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This scenario places the BTC price at risk of a further 4% decline towards the lower bound of the range indicated by the Bollinger Bands. A shift in this situation could occur if Bitcoin’s price manages to surpass the middle band at $90,200 in the coming hours.
An 8% surge within a few hours on a Sunday? It’s safe to say that this is highly improbable.
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Regrettably, the weekly chart tells an equally grim story, but on a broader scale. Here, Bitcoin also finds itself between the middle and lower bands, with the latter currently at $73,000. Therefore, if the situation does not improve medium-term, a 12.3% decline for Bitcoin is a likely scenario according to the Bollinger Bands on a weekly basis.
