Bitcoin Bollinger Bands echo move that ended in 40% January gains
Bitcoin Bollinger Bands echo move that ended in 40% January gains

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.

Bitcoin Price Rises on ‘Strong Move’ — But Direction Unknown

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.”

BTC/USD annotated chart. Source: Aksel Kibar/Twitter

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 Bollinger Bands Range Chart (screenshot). Source: Glassnode

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.

Related: Bitcoin Rejects 21-Day Trendline – How Low Can Bitcoin Price Go?

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.”

Bitcoin short/long term total realized value chart (screenshot). Source: Glassnode

Bookmark this article as an NFT Preserve this moment in history and show your support for independent journalism in the cryptocurrency space.

Magazine: Should You Give Your Kids the ‘Orange Pill’?The Case for Bitcoin Children’s Books

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.