Bitcoin (BTC) is experiencing a bout of volatility that could rival January’s 40% rally, on-chain data shows.
In the latest issue of the weekly communicationA week on the chain, analytics firm Glassnode announced the tightest Bollinger Bands since early 2023.
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BTC price has been in a tight range all month, with $30,000 the focus of sideways action.
According to prominent analyst Aksel Kibar (Aksel Kibar), this poses a test for both bulls and bears.
“It appears that BTCUSD is running out of patience for many traders,” he said. Summarize July 21.
“That’s usually what you see before a strong move. Not sure about direction though. I’ll stick to my clear boundaries. I know volatility is coming. Catch directional movement.”
Based on the behavior of the Bollinger Bands, this move should come sooner rather than later.
The classic volatility indicator is currently sending a clear sign that the days of Bitcoin’s range-bound price are numbered.
Bollinger Bands use the standard deviation around a simple moving average to determine when an asset’s price has undergone a trend change.
In the case of BTC/USD, its upper and lower bounds are currently unusually close — tighter, in fact, than at any time since Bitcoin began its upward run in 2023.
“Volatility in the digital asset market is still very small, and the classic 20-day Bollinger Band has experienced an extreme squeeze,” commented The Week On-Chain.
It added that the volatility was only 4.2%, which marked the “quietest BTC market since the lull in early January.”
At that time, Bitcoin broke out and continued throughout the month, bringing January gains to around 40%.
Bitcoin holder pipeline in early 2019
Glassnode went on to point out that at current levels, there is little in the way of active selling – either for profit or loss.
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This lack of “realized” activity persists despite BTC price gains since January and is a historically common phenomenon in periods following price cycle lows.
“The compression in volatility is matched by cyclical lows in the market’s locked-in realized gains and losses,” the report reads.
Profit plus losses are currently about $290 million a day.
Glassnode explained: “While in nominal terms this is a large number, it is again comparable to the 2019 peak and October 2020 BTC price which is 50% lower than it is now.”
“Thus, it shows that investors holding large profits or losses are extremely reluctant to spend Bitcoin on-chain despite the current market capitalization of Bitcoin at roughly double.”
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This article does not contain investment advice or recommendations. Every investment and transaction involves risk, and readers should do their own research when making a decision.
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