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Bitcoin (BTC) continues its wild ride that started in autumn and continues into winter, with December seeing the price of the major cryptocurrency lose as much as 3.5% in just two days, per TradingView. While the price of BTC seems to stabilize at around $87,000, the environment — and, more importantly, the chart structure — does not look stable at all.
This fragility is particularly evident in the Bollinger Bands, a popular indicator developed by veteran trader John Bollinger.
For those not familiar, the bands represent a trading range for the asset, built from a 20-day moving average and two standard deviations on both sides. Seasoned market participants use the indicator to understand what market momentum the asset — Bitcoin in this case — currently sits at and what bias prevails.
Looking at the price of BTC on the monthly time frame perfectly characterizes why the cryptocurrency seems so fragile in its current setup, extreme fear aside. The month opened for Bitcoin with a nasty red candle that erased all the late-November gains, pushed the price under the middle band and immediately switched the mode to a bearish one.
Bitcoin to $52,000: Bad dream no more
In this case, it is now more probable for BTC to hit the lower band — at $52,000 right now — a scenario that implies a 40% crash from the current $87,000 price tag.
If one were to defy this option for Bitcoin, it might be said that the current dip below the midband is nothing more than manipulation, but for this thesis to prove correct, the price would need to flip back above $88,890 per BTC and stay there for at least a week.
Until this happens, it is bear mode for Bitcoin, with hitting $52,000 as the prime scenario.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team