For the first time since 2016, the bitcoin (BTC) Bollinger bandwidth has fallen below 0.95. Bollinger Band is a widely used technical indicator to assess the volatility of an asset’s volatility trend. This could mean that a massive increase in volatility is imminent.
Bitcoin’s price was relatively stable from 2019 to 2020. Bitcoin’s price mostly ranged between $ 6,000 and $ 12,000, with the exception of March, when it fell below $ 3,600.
Bitcoin’s volatility may gradually increase in the coming months if it follows a similar pattern to 2016.
Has the Bitcoin rallying cycle started to materialize after the halving?
Bollinger Bands use moving averages in an asset chart to determine the range of volatility.
For example, when BTC becomes more volatile, the Bollinger Band stretches, indicating the formation of a larger price range. If BTC becomes less stable, then the range is restricted, indicating little space.
Perhaps the main reason why a narrow Bollinger band is signaling is that volatility is increasing because it means the range is getting narrower.
If bitcoin falls or rises in a narrow range, the probability of breaking out of the range decreases or increases.
For example, it will be difficult for BTC to break out of the $ 9,000 to $ 12,000 range. The price range is wide and will require significant buying or selling pressure to break the range.
In contrast, if the site is between $ 10,000 and $ 11,000, the likelihood that the site will fail or rise increases.
According to bitcoin trader Nunya Bizniz, there was no Bollinger band on the monthly bitcoin chart.
The monthly chart covers the period until 2013, when there was no suitable foreign exchange market yet. Therefore, it basically covers most of the historical BTC price cycles.
The Bollinger Band Show is approaching a unique area that BTC has yet to see. Given the trend, Beznis indicated that volatility may be emerging.
Investors also expect increased volatility.
Bitcoin has long been stable in a narrow range of $ 10,500 to $ 11,000. Hence, investors began to anticipate a significant movement in the bitcoin price.
Raoul Pal, CEO of Global Macro Investor and Real Vision Group, believes it will be a “big step” in the near future. It is to explain:
“The historical volatility of Bitcoin for 30 days is rapidly declining in her twenties. Previously, it had reached a volume of 20% 7 times. Prices rose 6 times in the first place, and within a few months the volume of sales reached 80%. Once (November) 2018) Prices are down sharply, and in any case, there will be a big step soon. ‘