/Analyst Warns: Bitcoin Price Surge Above $26,000 Could Trigger Volatility Eruption

Analyst Warns: Bitcoin Price Surge Above $26,000 Could Trigger Volatility Eruption

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 capitalization to rebound and surpass the previous resistance level of $25,200.

After a month of fluctuations, Bitcoin is currently on an upward trend, trading at $26,300. The 200-day moving average (MA) provides a strong support level, suggesting that BTC may be primed to reach 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 hit bottom last week, as represented by the 200-day MA, to be a critical indicator for determining the current trend of BTC. He noted: 

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

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

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

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.

Bitcoin volatility score breakout. Source: Jarvis Labs

As seen in the chart above, Bitcoin’s Volatility Score, represented by the blue line, is breaking out of its 7-month range and has recently surpassed its 200-day DMA (red line) at 26.13. This suggests that BTC will likely break out of the $15,000-$25,000 range shortly.

Bitcoin historically rallies after breaking above the 200-day MA. Source: Jarvis Labs

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

Consider the volatility we experienced in early March as a sample taste of what’s to come. We find ourselves 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 surpassed the $26,000 mark, bears remain hopeful for a return to previous lows, while bulls are optimistic as there is currently no major resistance above $26,000.

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

Bitcoin continues to rally on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Istock, chart from TradingView.com 

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