Bitcoin price rise above $26,000 could trigger volatility breakout

Riga, Latvia – February 22, 2018. cryptocurrency, golden bitcoin with a cardboard price tag on white background

After experiencing a sharp decline to $19,700 last week, Bitcoin (BTC) found support at its 200-day moving average (MA). This support helped the largest cryptocurrency by market cap to reverse and surpass the previous resistance level of $25,200.

After a month of volatility, Bitcoin is currently on an uptrend, trading at $26,300. The 200-day moving average (MA) is providing a strong level of support, suggesting that BTC may be poised to make new annual highs and approach The $30,000 level. However, this rally may be coupled with high volatility.

Early stages of a bull market

“JJ the Janitor,” an analyst on the Jarvis Lab team, considers the $19,700 level where Bitcoin bottomed last week, as represented by the 200-day MA, as a critical indicator for determining the current trend of BTC. He noted:

The fact that it was tested and held may confirm the thesis we’ve been sharing all year: This is the early stage of another bull market rally, not the late stages of a bear market rally.

The analyst believes that in the initial stages of a bull market, prices will eventually reach a point where they become overvalued, triggering a chain reaction of liquidations of “long open interest.” This liquidation cascade may occur when BTC approaches the $30,000 level.

In a future liquidation cascade, prices may plunge towards significant support levels, such as the 200-day MA, which will continue to rise as the BTC price rises.

Bitcoin natural state of high volatility

While the price of Bitcoin is currently above the 200-week MA, for the analyst, this represents a short-term victory, as if it holds this line, there will be no “overhead” resistance for BTC for the first time since 2021.

As shown in the chart above, Bitcoin’s volatility score, represented by the blue line, is breaking out of its 7-month range and recently crossed its 200-day DMA (red line) at 26:13. This suggests that BTC is likely to break out of the $15,000-$25,000 range soon.

As illustrated in the chart above, there was a significant increase in both volatility and price action from late 2020 to early 2021. Bitcoin broke through its 200-day MA during this period, rising from $15,500 to $58,000 in just four months. This shows the potential for BTC to unleash significant upward momentum in the months ahead. The analyst concluded:

Think of the volatility we experienced in early March as a taste of what’s to come. We are in a Brave New World now, one that BTC was uniquely designed for.

This week the cryptocurrency market has seen significant volatility. Although Bitcoin has crossed the $26,000 mark, bears are still hopeful of a return to previous lows, while bulls are optimistic as there is currently no major resistance above $26,000.

Bitcoin continues to make significant gains in all time frames. Currently trading at $26,300, BTC has gained 5.9% in the last 24 hours and 30% in the last seven days.

Featured image from Istock, chart from TradingView.com