2 Reasons Why $38,000-ish Is A Major Bitcoin Price Target
The bitcoin price reached as high as $38,000 last week. But since then, the rally has lost some steam. And that might be because the $38,000 region is a major bitcoin price target for technical traders. Here are two reasons why.
Reason 1: $38,000 is near bitcoin’s top Bollinger Band (monthly chart)
The top Bollinger Band represents a price movement that is 2 standard deviations above the middle band. And here, the middle band is bitcoin’s 20-month moving average. In other words, it represents the “upside volatility” around the 20-month moving average.
You can read all about Bollinger Bands here, but for the below chart, here’s what you need to know. Any rally above the top band is considered “extreme”. And any rally that is still below the top band is considered “normal”, according to the indicator.
The next chart shows how the bitcoin price just about reached the top band this month (blue circle). But so far, it’s been rejected at this level. In other words, this isn’t an “extreme” long-term move for bitcoin just yet.
Bitcoin’s top Bollinger band is a seriously important level. In full-blown bull markets, bitcoin trends above the top monthly band (green lines, chart below). Essentially, it means that monthly volatility is going up – along with the price. But when bitcoin gets rejected by the top band (red circles), it tends to trend down afterwards.
In past bitcoin cycles, the price has only trended above the top monthly Bollinger Band after the bitcoin halving. The next bitcoin halving is in April next year (you can read our bitcoin halving guide here).
Of course, history doesn’t have to repeat itself here – and bitcoin can still trend higher. But long-term investors will want to monitor bitcoin’s behavior around the top monthly Bollinger band in the coming months.
Reason 2: $38,000 is near bitcoin’s 0.618 “golden” Fibonacci retracement level
I drew a Fibonacci retracement (chart below) from bitcoin’s ~$69,000 peak in 2021 to its ~$15,500 low last year. I’ve also set this chart to a logarithmic scale – so it focuses on the percentage moves rather than number moves. As you can see, bitcoin is yet to clear the 0.618 Fibonacci retracement level at around $38,700. In other words, bitcoin hasn’t yet reclaimed 61.8% of its bear market losses.
In the 2019 rally (which was before the 2020 halving), bitcoin did clear the 0.618 Fibonacci retracement level (blue circle). But it then got rejected at the 0.786 Fib level (green). If history repeats, that would get bitcoin to about to about $49,000 before its next major pullback. You can read our Fibonacci guide here.
It’s clear that $38,000-ish is a major bitcoin price target. It’s near the top monthly Bollinger Band and the 0.618 Fibonacci retracement level. So closing November above it would be a sign of strength. Just keep in mind that bitcoin has already rallied about 130% this year – so manage your risk accordingly. For long-term investors, that means buying in gradually, especially during the bigger dips.
If you’d like to learn more about technical analysis, and how it can improve your long-term crypto strategy – check out our course below!