Bitcoin’s BTC$88,508.45 If we look at Bollinger Bands, a volatility gauge, the price chart looks very benign, suggesting big moves ahead.
BTC has been trading in a narrow range between $85,000 and $90,000 for the past two weeks. As a result, the gap between Bollinger Bands (a volatility band two standard deviations above and below the 20-day simple moving average of asset prices) has narrowed to less than $3,500, the lowest since July, according to data source TradingView.
This so-called Bollinger Band squeeze indicates a period of low volatility where the market is conserving energy for the next big move. History has shown that such squeezes are often followed by large price movements.
This is a daily chart of BTC. (Trading View)
For example, the last Bollinger Bands squeeze in late July had a two-week sideways upper limit of $115,000 to $120,000. The squeeze saw prices fluctuate wildly from $100,000 to $126,000, paving the way for a three-month expansion.
A similar pattern was seen in late February, with the range between $94,000 and $98,000 narrowing into a Bollinger Band squeeze, before falling to $80,000 by the end of the month.
Bollinger Bands have been pinpointing volatility explosions since at least 2018.
Therefore, the recent squeeze calls for traders to be cautious, as prices could move rapidly in either direction in the near term. Therefore, the recent squeeze calls for traders to be cautious, as prices could move quickly in either direction in the near future. At the time of writing, Bitcoin was trading at around $88,600, up just over 1% on a 24-hour basis.
