Last week, when bitcoin closed its June monthly candle, it also signaled the end of the second quarter of the year and its first half. The top cryptocurrency suffered its worst quarterly decline since 2011, but it eventually held back above a key support level.
Here’s a closer look at the quarterly support level in BTCUSD currently and how it has been at a major bottom almost anytime in the past.
Bitcoin Crashes Down to Levels Where Bear Market Bottoms
Throughout the 2018 bear market, a primary narrative that gave bag holders hope was that institutions would eventually move to bitcoin and that it would make all the difference. Institutions eventually found their way into crypto, putting many of them at risk of bankruptcy.
Large institutions have been known to take quarterly positions, and with two disappointing quarters in a row of performance in crypto, institutions may be ready to back off.
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The recent selloff has pushed the price of bitcoin down much lower than many expected – by more than 50%, making it the worst quarter in a decade. It also landed Smack Dead on the mid-Bollinger band.
BTCUSD quarterly closes above the middle-SMA | Source: BTCUSD on TradingView.com
How to read Bollinger Bands and what comes next?
Bollinger Bands are a volatility measuring instrument designed by John Bollinger in the 1980s. The middle Bollinger Band is a 20-period moving average, with the upper and lower bands set at 2 standard deviations.
Based on the data, most of the price action takes place within the upper and lower bands. A passing above or below the SMA is considered a buy or sell signal.
Every bear market in the past has touched the corresponding SMA before the 2016 and 2017 bull runs, and again before the 2020 bull run. The price of bitcoin is back on this line again, touching it for the second quarter in a row.
BTCUSD monthly touches down on the lower Bollinger Band | Source: BTCUSD on TradingView.com
A fall through the SMA would be unprecedented in the history of bitcoin. But bitcoin has been doing phenomenal things lately. For example, the same tool above shows the first touch of the lower Bollinger Bands on the monthly time frame.
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In theory, the price is considered low relative to the asset’s history when prices are at the lower end of the band, while the opposite occurs when an asset is touching the upper band. From this perspective, the price of bitcoin is potentially at its lowest point relative to monthly and quarterly price action.
Could this mean an unprecedented recovery is imminent, or could bitcoin eventually lose the SMA and result in a more disastrous move?
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Featured image from iStockPhoto, Charts from TradingView.com