Bitcoins the price chart looks super calm via Bollinger Bands, a volatility gauge that suggests a massive swing ahead.
BTC has been trading in a tight range between $85,000 and $90,000 for the past two weeks. As a result, the gap between the Bollinger Bands, volatility bands located two standard deviations above and below the 20-day simple moving average of the asset’s price, narrowed to less than $3,500, the lowest since July, according to data source TradingView.
This so-called Bollinger Bands squeeze indicates a period of low volatility where the market is building energy for the next big move. History confirms that massive price swings often follow these pressures.
For example, the last Bollinger Band squeeze in late July capped a two-week sideways between $115,000 and $120,000. The squeeze paved the way for a three-month expansion in which prices swung wildly from $100,000 to $126,000.
A similar pattern unfolded in late February: a range between $94,000 and $98,000 tightened into Bollinger Band squeezes, followed by a slide to $80,000 by month’s end.
Bollinger Bands have been accurately signaling volatility explosions since at least 2018.
The recent pressure therefore urges traders to be vigilant as prices may soon move rapidly in either direction. The recent pressure therefore urges traders to be vigilant as prices may soon move rapidly in either direction. At the time of writing, bitcoin was trading around $88,600, up just over 1% on a 24-hour basis.
