The price of Bitcoin illustrates a remarkably tranquil state via Bollinger Bands, a volatility indicator, suggesting an imminent significant price shift.
BTC has remained within a narrow band between $85,000 and $90,000 for the last fortnight. Consequently, the distance between its Bollinger Bands, which are volatility bands set two standard deviations above and below the 20-day simple moving average of the asset’s price, has constricted to below $3,500, marking the tightest range since July, per data from TradingView.
This Bollinger Bands squeeze signifies a period of low volatility, during which the market is accumulating energy for the forthcoming major movement. Historical data indicates that these squeezes frequently lead to substantial price fluctuations.
For example, the last Bollinger Band squeeze in late July constrained a two-week period of sideways movement between $115,000 and $120,000. This squeeze subsequently led to a three-month surge, with prices fluctuating dramatically between $100,000 and $126,000.
A similar scenario occurred in late February when a range from $94,000 to $98,000 culminated in Bollinger Band squeezes, followed by a drop to $80,000 by the end of the month.
Bollinger Bands have consistently signaled volatility surges since at least 2018.
This most recent squeeze necessitates heightened vigilance from traders, as prices may soon shift dramatically in either direction. As of the latest update, Bitcoin was trading around $88,600, reflecting a slight increase of over 1% within a 24-hour timeframe.
