A key technical indicator for Bitcoin (BTC) has contracted to its tightest level in history, with current volatility being low. Analysts expect this typically leads to significant breakouts and surges in volatility.
Renowned crypto analyst "Mr. Anderson" stated on the X platform on Tuesday that the weekly Bollinger Bands for Bitcoin (BTC) are now the tightest they have ever been. He refers to a technical indicator that shows volatility and potential overbought or oversold ranges.
He noted, "When volatility is so tightly compressed, expansion is inevitable. Once expansion begins, prices almost always quickly test the outer side of the Bollinger Bands."
Nassar Achkar, Chief Strategy Officer at CoinW exchange, told Cointelegraph that the tight contraction of the Bollinger Bands "signals the calm before a storm of intense volatility."
"Langerius," founder of Hunters of Web3, stated that such extreme contractions typically do not end in a calm manner.
Glassnode researcher "CryptoVizArt" disagreed with this view. He pointed out that due to the expanding scale of Bitcoin (BTC), overall volatility has been on a downward trend across all time frames, which is why the Bollinger Bands are also narrowing.
He stated, "This is not a signal, nor is it an abnormal structure; it is merely an observation with no actual predictive value."
The Bitcoin (BTC) Bollinger Bands tightened significantly in early July when the asset was trading at around $108,000.
A few days later, Bitcoin (BTC) experienced a surge in volatility, with prices breaking out significantly, rising to over $122,000 on July 14, marking a new all-time high.
This technical indicator tightened again in early September, reaching the most extreme level on the monthly time frame since Bitcoin (BTC) began trading.
Analysts have yet to determine the direction of Bitcoin (BTC) after October. Traders generally consider October to be a month when Bitcoin (BTC) achieves significant breakthroughs, hence it is referred to as "Bullish October."
Tony Sycamore, an analyst at IG Group, told Cointelegraph on Tuesday that Bitcoin (BTC) "still needs time to correct" and "continues to digest the overbought indicators from this year."
Many analysts shared historical performance charts from CoinGlass. They pointed out that Bitcoin (BTC) has risen in 10 out of the last 12 Octobers and has increased in 8 out of the last 12 fourth quarters.
Related: Democratic supporter of Bitcoin (BTC) Ian Calderon runs for California governor
Original article: “Bitcoin (BTC) Indicator Hits Record Squeeze, Signaling a ‘Major Volatility Storm’ Ahead”
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