Bitcoin has had a slow last few weeks, that’s for sure. It appears that the cryptocurrency is trading within a narrow range, unable to swing convincingly in either direction.
This is reflected in its historic volatility, which has been falling quite a bit. In fact, it’s currently at a point where, usually, a huge move is inbound.
Those who’ve been following the cryptocurrency markets long enough know that there’s rarely a boring day. And, in case there’s a boring period, it usually comes just before a huge swing in price.
This has been the case for the past month. Raoul Pal, a popular investment strategist, and industry expert pointed out that the Bitcoin 30-day historic volatility is dropping towards 20%.
“Bitcoin 30-day historic volatility has been falling fast and is in the 20’s. In the past, it has hit 20% vol times. 6 times prices exploded higher immediately and vol hit 80% in a few months. 1 time (Nov 2018) prices fell sharply. Either way, a big move is coming soon.” – He said.
Another thing to consider, in this regard, are the Bollinger Bands. These represent an essential indicator that measures the standard deviation of an asset from a given moving average. Put simply, the broader the bands are spaced from one another, the higher the volatility is, and vice-versa.
At the time of this writing, the bands are squeezed which further fuels the narrative that Bitcoin’s unable to break out of its current trading range and that there’s a huge move inbound.
According to Pal, history is in favor of the bulls because six times out of seven volatility was so low, Bitcoin broke to the upside.
However, back in November 2018 the Bollinger Bands were just as squeezed as they are about to be soon and the price crashed to its yearly lows.
It’s hard to determine the direction of Bitcoin, if at all possible. However, the technical indicators have lined up to suggest that there’s a huge move coming, so it’s time to be very careful.
