Bitcoin's Flash Rally to $10,400 was "Fake", Short the Cryptocurrency, Warns Renowned Trader Bollinger

“This is a Head Fake at the upper Bollinger Band for $btcusd,” tweeted Bollinger, inventor of the Bollinger Bands indicator.

A ‘head-fake’ trade happens when an asset price makes a move in one direction, but then reverses course and moves in the opposite direction, according to the know-it-all online dictionary Investopedia.

Bollinger Bands define high and low on a relative basis. By definition prices are high at the upper band and low at the lower band.

John Bollinger urged investors to trade with caution or to sell bitcoin ( BTC) altogether. He sated: “time to be cautious or short.”

Bitcoin rallied past $10,400 on June 1 in a brief breakout, possibly spurred by runaway coronavirus spending by governments throughout the world.

The dramatic swing may have reflected renewed investor optimism towards a bull run in the wake of Bitcoin’s recent third halving, but faded just as quickly as it started.

Some 24 hours later, the price of BTC plunged 17% in a matter of minutes to as low as $8,600 on Bitmex – a flash crash some observers attribute to manipulation by the so-called whales.

Bollinger’s analysis adds to a chorus of voices that have called out BTC’s impromptu rally as a false signal – at least in the short-term.

Bitmex co-founder and chief executive officer Arthur Hayes suggests that this week’s breakout was a bull trap and that bitcoin will have to rise by nearly 60% from its current price of about $9,400 before reclaiming the bulls.

“The basis is starting to get juicy. It sure beats earning 0% at the bank… But this rally ain’t real until we take out $15k,” Hayes said in a tweet.

Bitcoin has twice tried to breach $10,000 in the past two weeks, succeeding twice, but both the breakouts never lasted, as strong resistance set-in. Traders consider $10,000 a key level for a bullish upswing.

What do you think about John Bollinger’s prediction? Let us know in the comments section below.