The Bitcoin market has been in a phase of consolidation since early-January, post ETF approval, with the Bitcoin price moving sideways after breaking away from a previous upward trajectory. One month on, the price of Bitcoin is comparable to what it was on January 13 2024. However, this period of calm may be on the verge of ending, as suggested by the Bollinger Band Width (BBW) indicator, which is forecasting an upcoming surge in volatility.
Derived from Bollinger Bands, the BBW is a tool used to understand market volatility by observing the widening and narrowing of the gap between the upper and lower bands around a central moving average. With the BBW currently showing a value close to 0.10, it indicates a time of low volatility, signaling a potential market “squeeze” ahead.
A period of tight band convergence to 0.10 on the BBW indicator referred holds opportunity for a “Mega Squeeze”, which usually precedes a dramatic market adjustment, either upwards or downwards.
Historical data supports this prediction, with Bitcoin undergoing considerable price fluctuations following similar BBW readings. Examples include a 30% price increase in October last year, a 15% decrease in mid-August 2023, and a 40% rise in early January 2023. Currently, Bitcoin stands at approximately $42,900, with key price points at $49,000 and $38,600 acting as support and resistance areas for the upcoming market movement.
The information provided herein is for educational and informational purposes only and should not be construed as financial advice, investment recommendation, or an offer or solicitation to buy or sell any securities. Cryptocurrency investments are volatile and high risk in nature, do not invest more than you can afford to lose.