Bitcoin drops below $62,000 as consolidation continues, but traders see possible parabolic rally

• BTC is down 3% over the past 24 hours, with ETH, AVAX, LINK, and UNI suffering the biggest altcoin losses.

• Bitcoin’s weekly Bollinger Bands fell to similar levels seen in October last year, as well as previous episodes ahead of major rallies, crypto trader CryptoCon noted.

• Altcoin investors will have a tougher time ahead, but the fourth quarter and next year could offer more upside potential.

Bitcoin {{BTC}} fell below $62,000 during US morning trading on Tuesday, as the crypto market ended its rally from early August lows.

The largest crypto fell to a low of $61,500, now down more than 5% from its meteoric rally to $65,000 following Federal Reserve Chairman Jerome Powell’s announcement. pigeon speech in jackson hole on Friday. It is down 3% in the last 24 hours.

The weak action spread to the broader market, with the widely supported CoinDesk 20 Index Down 2.8% over the same period. Ethereum’s ether {{ETH}} continued its losing streak against BTC, dropping more than 5% below $2,600 and dragging the ETH/BTC ratio to its lowest level in more than three years.

Altcoin giants also suffered losses, with local cryptocurrencies Avalanche {{AVAX}}, Chainlink {{LINK}} and Uniswap {{UNI}} leading with declines of 4%-7%.

Volatility ahead

Bitcoin’s sideways moves since March’s record highs are testing investors’ patience. However, similar multi-month consolidation phases have occurred in every previous bull cycle, including last year between March and October.

CryptoCon, a prominent crypto trader, noted that the current low volatility phase for BTC is likely a precursor to a breakout to new all-time highs, based on an analysis of the Bollinger Band Width on the weekly timeframe.

Bollinger Bands, named after the renowned traditional technical market analyst John Bollinger, represent an asset’s volatility and are placed two standard deviations above and below the 20-week moving average of the price.

“This is the third and final low volatility phase that occurs mid-cycle, each cycle at the weekly Bollinger Band Width,” CryptoCon said in a X-message. “5 months of sideways price action is not new…,” he added. “If you miss 2025, you miss 2021, 2017 and 2013.”

It is striking that a similar compression of the Bollinger Band Width occurred in October of last year, just before Bitcoin broke out of a long consolidation period and eventually surged nearly 200% to $73,000 in March.

The story continues

Altcoin Pain

Altcoin holders may face further pain before lower-cap cryptocurrencies surge and surpass bitcoin, market research firm ByteTree said in a report on Tuesday.

“Altcoin investors should keep their faith. It’s tough, but the underperformance of alts vs. bitcoin has been tough,” ByteTree founder Charlie Morris wrote in the report. “The good news is that positioning is light, so when the good times return, there’s potential for another strong altcoin rally.”

In previous market cycles, altcoins followed bitcoin’s rally six months after bitcoin’s quadrennial halving, Morris noted.

The last halving took place on April 19, 2024, which could point to a possible rally later this year, sometime in October.

“If anything, alts got a little worse before they got better,” Morris added. “If history repeats itself, alts should start to rally in the new year, but only after Bitcoin has risen. The good news is that we’re headed for a run in Q4.”