John Bollinger, a renowned trader and the creator of Bollinger Bands, has issued a warning about a potential correction for Bitcoin and Ethereum following their recent price surge. Bollinger conveyed these concerns in two separate posts on X in response to queries from traders regarding his stance on the recent market developments. Bitcoin (BTC) and Ethereum (ETH) have notably led the market’s shift from a bearish to a bullish momentum this week.
Bitcoin experienced a significant surge of 7.8% in intraday gains on Monday, breaking a four-day period of consolidation below the psychological threshold of $68,000. This rebound allowed the leading cryptocurrency to surpass the $70,000 level for the first time in over a month, reaching a peak of $71,500 before encountering resistance.
On the same day, Ethereum witnessed an impressive surge of 19.25%, marking its most significant intraday gain in over six years. This remarkable performance propelled ETH beyond the $3,600 mark, continuing its upward trajectory until May 21 and culminating in a two-month high of $3,839.
As the market recovers, participants who missed the dip are looking to increase their holdings, while those who currently hold positions remain uncertain about the future direction. This growing uncertainty has led to questions being directed at market veterans like John Bollinger.
In response to numerous inquiries about the sustainability of Ethereum’s recent uptrend, Bollinger noted that the optimism surrounding the potential approval of Ethereum spot ETFs by the U.S. Securities and Exchange Commission (SEC) had already been largely factored into the market. Reports this week suggested that the SEC might approve the trading of spot ETH ETFs, triggering bullish sentiments and driving significant buying interest. However, Bollinger pointed out that the favorable news had already reduced the discount at which Ethereum was trading, cautioning that the price movement had become over-extended. As a result, he decided to reduce his holdings, suggesting that the current price level might not be sustainable in the short term.
Market data supports Bollinger’s concerns, 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 ETH is overbought and could potentially experience a retracement.
Turning to Bitcoin, Bollinger observed a two-bar reversal pattern forming at the upper Bollinger Band, indicating the potential for a period of consolidation or a short-term pullback in Bitcoin’s price. However, he clarified that he is not bearish on Bitcoin overall and expressed a short-term concern, suggesting that while it might experience a brief pause or slight decline, the long-term outlook remains unchanged.
It is important to note that the views expressed in this article are the author’s personal opinions and should not be considered financial advice. Readers are encouraged to conduct thorough research before making any investment decisions.