- According to on-chain data, Bitcoin
is gearing up for a volatility explosion that could rival its 40% surge seen in January.
- In BTC/USD, the upper and lower Bollinger Bands are currently extraordinarily close – in fact, it’s the tightest period for Bitcoin since the beginning of 2023.
- Bitcoin saw a steady rise throughout the month after its gains soared by around 40% in January.
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Bitcoin prices have been trapped within narrow Bollinger Bands for days; a significant volatility explosion might be approaching.
Bitcoin Consolidates: What’s Next?
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According to on-chain data, Bitcoin is gearing up for a volatility explosion that could rival its 40% surge seen in January. Analytics firm Glassnode’s report points out that it’s the narrowest Bollinger Bands period since the beginning of 2023. The BTC price has moved within a tight range for a month, using $30,000 as a horizontal consolidation point.
According to Bollinger Bands’ behavior, a volatile move is expected to happen soon. The classic volatility indicator uses a simple moving average and standard deviation to determine when an asset’s price should change within a trend.
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In BTC/USD, the upper and lower Bollinger Bands are currently extraordinarily close – in fact, it’s the tightest period for Bitcoin since the beginning of 2023. Glassnode’s report states:
“The digital asset market is still seeing quite low volatility, and the classic 20-day Bollinger Bands are experiencing an extreme squeeze.”
Moreover, the 4.2% range between the Bollinger Bands signifies the “quietest BTC market after the stagnation in January.” During that time, Bitcoin saw a steady rise throughout the month after its gains soared by around 40%.
Bitcoin holders remember early 2019
Glassnode also highlighted that there is very little active selling for profit or loss at current levels. This lack of “realized” activity is described as a phenomenon commonly seen after price cycle lows throughout history, despite the gains in BTC price since January. Glassnode stated:
“This squeeze in volatility aligns with realized cycle lows in the market’s locked up profits and losses.”
The total sum of current profits and losses amounts to an average of $290 million per day. Glassnode notes that “while this is a significant amount in nominal terms, it is comparable to the peak of 2019, and it suggests that investors with significant profits or losses are highly reluctant to spend their coins, as they did in October 2020 when BTC prices were under half of their current value despite the Bitcoin market cap being roughly twice as large today.”