The recurrent hype about Bitcoin is that the senior cryptocurrency is going to rise to some astronomical price by the end of the current year or even current quarter. There certainly have been fortunes made by those who through foresight of blind luck purchased early and held on to their Bitcoin. However, in our opinion, the perpetual volatility of Bitcoin provides a more likely path to wealth than long term investing. The trick is to understand how to profit from Bitcoin price swings.
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Bitcoin Technical Analysis
Bitcoin trading occurs in sufficient volume to make technical analysis a practical way to predict future prices. What is technical analysis? Technical analysis is the application of statistical analysis of price over time. The long term motto of technical analysts is that “the market will tell you what the market will do.” This approach goes way back to rice trading in Japan in the days of the Samurai. A trader recognized that specific price fluctuation patterns could accurately predict rising or falling prices. Today the same approach called Japanese Candlesticks is still in use but computer programing has provided many alternative technical predictive systems. One only needs to look at a Bitcoin price chart to see that while the longer term price of Bitcoin may not change much, the sum total of ups and downs can be substantial. For the month ending on January 20, 2026 the price of Bitcoin rose from $88,000 and settled back at $88,000 to finish the 30 day period. During that month Bitcoin had price swings of $12,000 and $5,500. Thus a trader who correctly anticipated those price swings would have made money while someone who bought at the beginning of the month and held until the end did not!
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How to Use Technical Analysis to Trade Bitcoin
Bitcoin trades in high volume making it possible to apply statistical tools to predicting market movements. This is not commonly the case with so-called alt coins that trade at much lower volume and are essentially unpredictable using statistical technical analysis tools. There are several commonly used technical tools that help predict Bitcoin price movements. These include simple and exponential moving averages, the relative strength index, the moving average convergence divergence indicator, on balance volume, and the accumulation/distribution line. In general by using these tools a Bitcoin trader can get a clear idea of how much interest there is in buying and/or selling Bitcoin and thus better predict where the market will go next. Moving averages are generally the first tool to use as they smooth out the daily and hourly “static” of up and down price movements. Veteran traders commonly use more than one technical analysis tool in order to confirm signals from the first tool with the second or even third.
Practice Makes Perfect with Technical Tools
As with any approach to trading Bitcoin it is important to learn how each tool works and to use it until proficient. Commonly given advice from professional traders is the one should never trade real money with Bitcoin or any other asset until one is able to reliably profit in practice trading.
Wash Trading and Risk With Bitcoin Trading
There is one important factor the Bitcoin technical traders need to pay attention to. It is called Bitcoin wash trading. Wash trading is when a trader simultaneously sells and buy the same stock or cryptocurrency. In the stock market this practice is not legal as it is typically done to try to fool the IRS into allowing a tax write off. However, there are no rules in the Bitcoin market to disallow this practice. The problem for a trader is that wash trading gives the appearance of more market activity and interest and actually exists. Because trading volume is commonly used, along with price swings, in deciding whether to buy or sell Bitcoin a novice trader may be tricked into buying into what they believe will be a rally only to see the price fall and lose money. As one can see from the thirty-day example of trading we use for this article throughout the month there were brief upward spikes then quickly corrected and more substantial rallies that could have resulted in profit opportunities. Sorting this out is part and parcel of successful technical trading of Bitcoin.
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Originally published at https://profitableinvestingtips.com on February 23, 2026.
How To Profit from Bitcoin Price Swings was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.