Bitcoin Might Make a Big Move as Bollinger Bands Tighten

August 01, 2024 12:00 AM AEST | By Team Kalkine Media

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Bitcoin Might Make a Big Move as Bollinger Bands Tighten — Image source: shutterstock.com

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A crucial Bitcoin trading indicator has reached its "tightest point" in 12 months, suggesting that a significant price movement may be on the horizon. This indicator, known as Bollinger Bands, measures the volatility and momentum of an asset within a specific range. The last time Bollinger Bands were this tight, Bitcoin experienced a 20% price increase over the following four months.

Analysis of Bollinger Bands

Crypto trader and analyst Matthew Hyland highlighted this development in a July 31 analysis video, noting that Bitcoin's Bollinger Bands have reached their third highest point in their entire history across weekly time frames since Bitcoin’s inception in January 2009. Hyland emphasized that this pattern suggests an imminent move.

Historical Context and Observations

Other traders have also observed this pattern. Crypto trader MaxBecauseBTC noted that the Bitcoin weekly time frame Bollinger Bands have only tightened this significantly on two previous occasions: April 2016 and August 2023. Kristoph Jeffers, chief operating officer at Three Jay Partners, pointed out on X that this crypto weekly Bollinger Bands are currently tighter than the daily Bollinger Bands, which is an unusual occurrence.

Consolidation Phase Nearing an End

Bitcoin has been consolidating within a narrow range of approximately 25% since March 13, fluctuating between a high of $73,679 and a low of $55,849. Hyland suggests that this period of consolidation is likely coming to an end. According to Hyland, the tightening of the Bollinger Bands indicates that a significant move is imminent, potentially within the next month.

Potential for a Significant Price Surge

Hyland referenced a similar pattern observed in July 2023, which resulted in a 20% surge in Bitcoin's price over the subsequent four months. If this historical pattern repeats, Bitcoin’s current price of $63,845 could potentially rise to a new all-time high of $76,614 by November, based on CoinMarketCap data. Hyland believes that while it may take a few more weeks, Bitcoin is nearing a phase of significant price movement.

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