It has been stated that Bitcoin’s flash rally to the $10,400 mark on Monday was fake, and traders should look to short the cryptocurrency at the moment as losses are around the corner.
Bollinger Warns on Fake Rally
A popular long-term cryptocurrency trader, John Bollinger warned traders and investors that the rally of Bitcoin to the $10,400 level was fake, adding that losses are on the way for the leading crypto.
In the financial world, a head-fake trade occurs when an instrument price makes a massive move in one direction, but then reverses its movement in the other direction as soon as it made it. Bollinger Bands showcase high and low prices on a relative basis. For this indicator, prices are high at the upper band while they are down on the lower end.
As such, John Bollinger advised investors to trade with caution or to sell their BTC stash. Bollinger added that this is the time to be cautious of the performance of the leading cryptocurrency. Bitcoin surged to the $10,400 mark on June 1, after stagnating at the $9,500 level for the past few days. The rally was likely due to runaway coronavirus spending by governments across the globe.
The sudden rally may have renewed some investors’ and traders’ faith in the cryptocurrency as they expected a bull run after the third-halving event on the network last month. However, the rally faded just as quickly as it started. Twenty-four hours after the rally, the price of BTC plummeted by 17% within minutes to trade at $8,600 on Bitmex, with many observers attributing the crash to market manipulation by the whales.
Is This The Time To Sell?
Bollinger’s views are in line with other leading personalities in the cryptocurrency trading sector, who believe that the rally was a bull trap. The co-founder and CEO of trading platform Bitmex, Arthur Hayes, noted that he believes the breakout this week was a bull trap. He suggested that before Bitcoin reclaim the bulls, the price needs to rise by almost 60% from its current trading price of $9,500.
Hayes tweeted that the basis is getting exciting, and it is still better than earning 0% when you keep your money with a bank. However, Hayes did go on to say that the rally is not real until we reach the $15,000 mark.
Over the past two weeks, Bitcoin has surpassed the $10,000 mark. However, the breakout did not last on any of the occasions, with the rally being met with strong resistance that dragged the price down to its former level. Most traders believe that surpassing the $10k level would signal a bullish upswing for the leading cryptocurrency.
The third halving event on the Bitcoin network took place on May 11, with the cryptocurrency world excited about it as previous halvings were followed by massive bull runs. The reward for mining a block on the Bitcoin blockchain has now been reduced to 6.25 BTC from the previous 12.5 BTC. This increases the mining difficulty and reduces the rewards for the miners. Despite the price still below the $10k level, most investors and traders are optimistic that Bitcoin will overcome its bearish trend this year and embark on a bull run.