Bitcoin (BTC $29,881) is lining up a burst of volatility that could rival its 40% January gains, on-chain data suggests.
In the latest edition of its weekly newsletter, The Week On-Chain, analytics firm Glassnode revealed the tightest Bollinger Bands since the start of 2023.
BTC price due “strong moves” – But direction unknown
BTC price has acted in a tight range for an entire month, using $30,000 as a focal point for sideways behavior.
This, popular analyst Aksel Kibar says, is putting both bulls and bears to the test.
“Seems like $BTCUSD is exhausting many trader’s patience,” he summarized on July 21.
That is usually the condition you see before strong moves. Not sure about the direction though. I will stick with my well-defined boundaries. I know that increased volatility is around the corner. Capture the directional move.
BTC/USD annotated chart. Source: Aksel Kibar/Twitter
According to Bollinger Bands behavior, that move should come sooner rather than later.
The classic volatility indicator is currently printing a telltale sign that the days of rangebound BTC price action are numbered.
Bollinger Bands use standard deviation around a simple moving average to determine when an asset’s price is due a shift in trend.
On BTC/USD, its upper and lower band are unusually close together at present — more compact, in fact, than at any time since Bitcoin began its 2023 upside.
“The digital asset market continues to see remarkably little volatility, with the classic 20-day Bollinger Bands experiencing an extreme squeeze,” The Week On-Chain commented.
It added that with a range of just 4.2%, this marked the “quietest BTC market since the lull in early January.”
At the time, Bitcoin saw a breakout which then continued throughout the month, bringing January gains to around 40%.
Bitcoin Bollinger Bands range chart (screenshot). Source: Glassnode
Bitcoin hodlers channel early 2019
Continuing, Glassnode noted that at current levels, there was little by way of active selling — either for profit or loss.
This lack of “realized” activity comes despite the BTC price gains since January and is a historically common phenomenon in periods after price cycle lows.
“This compression in volatility is matched by cyclical lows in realized profit and loss being locked in by the market,” it wrote.
The sum of profits plus losses currently equals around $290 million per day.
“Whilst this is a significant sum on a nominal basis, it is again comparable to the 2019 peak, and to October 2020 where BTC prices were 50% lower than they currently are,” Glassnode explained.
As such, it suggests that even though the Bitcoin market cap is ~2x larger today, investors who are holding large profits or losses are extremely unwilling to spend their coins on-chain.
Bitcoin short/long-term total realized value chart (screenshot). Source: Glassnode
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch
Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction
Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs
The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin (BTC) price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot Exchange Traded Funds (ETFs) in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.