Bitcoin (BTC) could be on the verge of significant gains, as a well-known trader has identified a rare bull signal on the Bollinger Bands indicator on the Bitcoin monthly chart. The Bollinger Bands indicator is a key volatility indicator that revolves around a 20-period simple moving average (SMA) functioning as a midline, with two standard deviations above and below representing the channel. The price coming into contact with the bands or breaking beyond them is often considered significant by traders. If BTC breaks above the SMA line, this would indicate a classic repeat of past bull runs.

Halving Cycles and Volatility

BTC price action has been impacting sentiment in different ways across various timeframes, with the consensus remaining that Bitcoin’s upside mainly lies ahead as the block subsidy halving approaches. Previous halving cycles have shown that volatility is an important factor to consider when tracking what comes next. Bollinger Bands on monthly timeframes are setting up a repeat of a breakout event that has only occurred once in each cycle. In the two previous instances, BTC/USD broke through into the upper section of the Bollinger Band channel to see significant gains.

Price Target of $63,500

Commenting on the potential breakout, the trader described it as an “inexorable breakout.” If confirmed, this could bring Bitcoin to a solid $63,500, which is not quite enough to match its current all-time high, but the price target could be reached around the point of the halving in one year’s time. However, how long it will take for this to happen remains to be seen, according to the trader. John Bollinger, the creator of the Bollinger Bands, himself argued last month that Bitcoin was at a crucial point on daily timeframes, and the price has been heading higher toward the upper band. Despite Bitcoin’s comedown from local highs of $31,000, low-timeframe Bollinger Bands norms remain intact, according to analyst CryptoCon.

Analysis

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