itcoin traders and analysts are paying close attention to evolving signals from popular volatility indicators that have tightened to ranges not viewed in over 12 months.
The declining volatility measures arrive as Bitcoin remains broadly rangebound for several months, leading to speculation among some market analysts that a huge price move may be on its way.
The Bollinger Band indicator has displayed patterns similar to those that have transpired in 2023 and even earlier - prompting traders to think about what could possibly come next in terms of Bitcoin price action.
Bollinger Bands squeeze to third tightest level in Bitcoin's history
A key indicator that has caught the attention of many is Bitcoin's Bollinger Bands, which track an asset's usual trading price deviation over a given number of days.
Data reviewed in the tweet by crypto trader Matthew Hyland shows that these bands have recently compressed to the third tightest formation ever seen when studying publication Bitcoin charts going all the way back.
In fact, the bands have converged to an extent only surpassed twice before: in late April 2016 and again recently.
On both of these earlier occasions, we saw a significant Bitcoin price spike in the following four months. The bands have, interestingly enough, also constricted even tighter than the ones observed on present BTC price charts at daily scales.
If similar growth takes place in the next few weeks or months, it could bring Bitcoin up around 20% from its current $63,000 price to overtake that elusive marker of $75,000 for the first time.
Prolonged Consolidation Period May Be Ending
Another key thing to note is that Bitcoin has traded in a 25% range between its mid-March highs of $73,679 and lows of $55,849 for more than two weeks now. While such an extended consolidation is unusual, traders point out that previous stretches of sideways trading ended in swift breakouts.
Based on Hyland's calculation, Bitcoin is on the verge of breaking out of this extended flat period and this suggests that the volatility indicators – specifically the tightening Bollinger bands surrounding price, are pointing to a move "within a month at this point."
That conclusion is supported by technical patterns seen in July 2023 – which, just like with the Bollinger Bands now, hit similar levels of tightness. However, it only took four more months until a 20% uptrend began.
If history repeats, Bitcoin could soon exit the consolidation it has been stuck in for the last six months and embark on a price discovery journey above $70k.
This upcoming week, traders will be watching the world's largest cryptocurrency for a breakout from the trading range it has been in lately. Whether this is an area where volatility expands or continues to compress, it will hopefully give insight into Bitcoin price's next major move.
