Renowned trader John Bollinger, the creator of Bollinger Bands, has issued a warning about an impending correction for Bitcoin and Ethereum following their recent price surges.
Bollinger made these warnings in response to inquiries from traders about his stance on the recent market momentum. Bitcoin and Ethereum have been leading the way in shifting the market from a bearish to a bullish trend.
Bitcoin saw a 7.8% surge in intraday gains on Monday, breaking a four-day consolidation period below the $68,000 mark. This rebound allowed Bitcoin to reclaim the $70,000 level for the first time in over a month, reaching a high of $71,500 before facing resistance.
On the same day, Ethereum experienced a remarkable surge of 19.25%, its largest intraday gain in over six years. This historic performance pushed Ethereum beyond the $3,600 mark, continuing its upward trajectory until May 21 and reaching a two-month peak of $3,839.
As the market recovers, those who missed the dip are looking to increase their holdings, while those who already have positions remain uncertain about the future direction. This growing uncertainty has led to questions for market veterans like John Bollinger.
In response to inquiries about the sustainability of Ethereum’s recent uptrend, Bollinger noted that the optimism surrounding the potential approval of Ethereum spot exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) has already been factored into the market. Reports this week suggest that the SEC may approve the trading of spot ETH ETFs. While this doesn’t guarantee approval, it has sparked bullish sentiments and contributed to the recent rally.
However, Bollinger pointed out that the positive news has already driven significant buying interest, reducing the discount at which Ethereum was trading. Ethereum’s bearish phase in recent days saw it trading at a discounted price below $3,000 at one point. Bollinger expressed caution about the rally’s future prospects, suggesting that the price movement had become overextended. As a result, he decided to reduce his holdings, indicating that the current price level may not be sustainable in the short term.
Market data supports Bollinger’s sentiments, with the relative strength index (RSI) spiking from a low of 37.84 on May 14 to the current value of 71.10. While a spike in RSI indicates growing strength, an RSI above 71.10 suggests that Ethereum is overbought and could be due for a retracement.
Turning to Bitcoin, Bollinger observed a two-bar reversal pattern forming at the upper Bollinger Band, indicating the potential for consolidation or a short-term pullback in price. However, he clarified that he is not bearish on Bitcoin overall and expressed a short-term concern. He believes that while Bitcoin may experience a brief pause or slight decline, the long-term outlook remains unchanged.
It is important to note that this content is informational and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to conduct thorough research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses.