Bitcoin Slides Below $62K as Consolidation Drags on, but Traders Eye Possible Parabolic Rally

The largest cryptocurrency dropped to around $61,500, representing a decrease of over 5% since it surged to $65,000 following Federal Reserve Chair Jerome Powell’s optimistic speech at Jackson Hole on Friday. Over the last day, its value has decreased by 3%.

Volatility ahead

The ongoing sideways movement of Bitcoin since its peak in March has been trying the resolve of investors, yet it’s important to remember that such prolonged consolidation periods have occurred during past bull markets too, like the one we saw from March to October last year.

According to popular cryptocurrency trader CryptoCon, the current period of low volatility in Bitcoin could signal a surge towards fresh record highs, as suggested by his study of the Bollinger Band Width on a weekly basis.

Bollinger Bands, a term coined by market analyst John Bollinger, indicate an asset’s volatility. They are drawn by calculating two standard deviations, one above and one below, from the 20-week simple moving average of the asset’s price.

In a recent post, CryptoCon stated that we are currently in the third and concluding phase of low volatility, which typically occurs halfway through each cycle, based on Weekly Bollinger Band Width. He further mentioned that experiencing five months of sideways price movement is not unusual… He emphasized that failing to invest during 2025 could mean missing out on the opportunities seen in 2021, 2017, and 2013.

Interestingly, a comparable contraction in Bollinger Band Width occurred in October last year, which preceded bitcoin’s breakout from a prolonged consolidation period. This was followed by a significant rise of almost 200%, reaching $73,000 by March.

Altcoin pain

It could be that altcoin investors may experience further difficulties before smaller cryptocurrencies start increasing significantly and surpassing Bitcoin’s performance, as suggested by the market analysis firm ByteTree in their report published on Tuesday.

According to Charlie Morris, founder of ByteTree, investors in altcoins should remain optimistic despite the current challenges. The underperformance of altcoins compared to Bitcoin has been hard to swallow. However, he points out that the situation looks promising because the market positioning is currently light. This means that when positive conditions return, there’s a possibility for another powerful rally in altcoins.

In previous market patterns, altcoins have tended to mirror Bitcoin’s price surge approximately six months following Bitcoin’s quads-year halving event, as Morris observed.

The most recent reduction event occurred on April 19, 2024, suggesting that a possible surge might occur toward the end of this year, approximately in October.

Morris noted that in every instance, alternatives saw a temporary decline prior to improvement. If past trends continue, alternatives may start gaining traction in the upcoming year, but this will likely occur after Bitcoin has experienced significant growth. The positive aspect is that we appear to be heading towards a bullish trend in the fourth quarter.