Bitcoin The price chart looks super calm through the Bollinger Bands, a volatility indicator, hinting at a massive turnaround ahead.
BTC has traded in a tight range between $85,000 and $90,000 for the past two weeks. As a result, the gap between its Bollinger Bands – volatility bands located two standard deviations above and below the asset’s price’s 20-day simple moving average – has narrowed to less than $3,500, the lowest level since July, according to data source TradingView.
This so-called Bollinger Bands squeeze indicates a period of low volatility in which the market is building up energy for the next big move. History confirms that these contractions usually follow massive price swings.
For example, the latest Bollinger Bands squeeze in late July ended a two-week sideways swing between $115,000 and $120,000. The restriction paved the way for a three-month expansion, with prices swinging wildly from $100,000 to $126,000.
A similar pattern developed in late February: a range between $94,000 and $98,000 narrowed in the Bollinger Bands, followed by a drop to $80,000 at the end of the month.
Bollinger Bands have accurately signaled bursts of volatility since at least 2018.
Therefore, the latest contraction demands vigilance from traders as prices could soon move quickly in either direction. Therefore, the latest contraction demands vigilance from traders as prices could soon move quickly in either direction. At the time of writing, bitcoin was trading around $88,600, up just over 1% in 24 hours.
