John Bollinger, the technical analyst behind Bollinger Bands, flagged Bitcoin's recent price strength as a potential inflection point. A W-shaped reversal pattern, if completed, could "break" the entire downtrend that has constrained the asset since its 2021 peak, Bollinger suggested.
The W-shape—two troughs separated by a middle peak—is a classic reversal signal in technical analysis. It signals buyer conviction after two separate sell-offs fail to reach lower lows. Bitcoin was trading around $62,614 at publication, having recovered from December lows that tested $42,000.
Bollinger's read hinges on price action holding above the pattern's middle peak. If buyers defend that level and push higher, the technical setup dissolves the bearish narrative that has dominated the past three years. A failed attempt—a breakdown below the second trough—would instead confirm continued downtrend pressure.
The stakes are concrete for traders: confirmation of the W-shape would suggest institutional and retail buyers have shifted from capitulation to accumulation. A break would do the opposite, treating the recent rebound as a bear-market bounce rather than regime change.
Bollinger Bands themselves measure volatility by plotting two standard deviations above and below a moving average. During extended downtrends, price tends to oscillate between the bands without breaking above the upper line. A sustained move above that line, paired with a completed W-shape, would signal the two-year compression is ending.
Historically, complete W-shaped reversals take weeks or months to resolve. Confirmation isn't binary or fast. Bollinger's observation carries weight because Bollinger Bands remain one of the oldest and most-watched volatility tools in legacy and crypto trading, but the pattern alone carries no guarantee. Price action below the middle trough would invalidate the setup and realign traders with downside risk.