Bitcoin Is Riding The Bands Of A Bull Market

Bitcoin is doing something it only does in major bull runs: riding the top Bollinger Band on the weekly time frame. Here’s a quick explanation of what it means and why it’s incredibly bullish for bitcoin – until it isn’t.

Each red or green candle on the chart below represents one week of price movement for bitcoin. I’ve drawn Bollinger Bands around these bars to show the relative volatility of the investment. When the bands are further apart, there’s bigger price movement from week to week (i.e. more volatility). When they’re closer together, bitcoin is generally stable and “boring”.

The yellow circle shows that bitcoin’s weekly Bollinger Bands are getting wider apart – while the price trends around the top band. In other words, bitcoin’s volatility is ramping up as the price moves higher. It means the bull market is getting stronger. And it will keep getting stronger until that volatility starts to cool off and the bands contract.

What’s the opportunity here?

This bullish phenomenon is known as “riding the bands.” The last time bitcoin did this was in the bull run of late 2020 (blue circle) – with volatility climbing as the price multiplied.

But the more volatile the bull run gets, the greater the chance of a big shakeout. For investors, it’s like trying to jump on a train that’s picking up too much speed. So if and when that shakeout comes, it tends to get bought up by those who missed the first stop.

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The usual disclaimer: none of this is investment advice. It’s just my interpretation of a price chart.