Compressed volatility in BTC is signaling that a huge move is coming, but will it be up or down?
Over the last couple months bitcoin has basically been range bound.
Stuck between basically $8,800 and $10,000 with moves unable to garner any follow through when it has briefly traded outside of this range.
That may be about to change...
Bollinger band width, which is a measure of volatility in prices, is in the blue zone.
A zone that has historically meant a surge in volatility was likely very near:
(Source:
)https://twitter.com/ByzGeneral/status/1274330375351865346
- ByzGeneral
In fact, I remember seeing a more recent chart saying that the bollinger band width was not only in "the blue zone" but was actually now at the lowest levels ever recorded...
Meaning that right now bitcoin is less volatile than it has been at any point in its entire history.
Wowza...
(Source:
)https://twitter.com/mikemcglone11/status/1276462890011242496
- mikemcglone11
Interestingly enough, the last time the bollinger bands were close to this narrow was right before bitcoin started its bull run back in 2016.
Coincidence?
I think not, but we shall see.
The question likely on everyone's mind now is do we break up or break down?
Just basing our charts off of what has happened historically, there is a decent chance the breakout is to the upside.
Like I mentioned above, the last time the bollinger band width was near these levels was right before bitcoin started its massive bull market rally in 2016.
However, the current positioning of institutions is saying the exact opposite...
Institutional Traders on the CME are net short roughly 2,038 of the CME’s BTC futures contracts:
(Source:
)https://twitter.com/ByzGeneral/status/1277389900309037061/photo/1
- ByzGeneral
Normally I wouldn't pay much attention to this metric and might even consider it a good thing, but if you notice, this group of institutional traders was also net short a similar amount right around our February highs just before BTC saw a significant correction.
Which means it might be worth paying attention to.
It also might be one of those things where we have a dip in the short term and then ultimately a large rally in the medium and longer term follows.
In fact, I'd bet on this scenario playing out.
A dip in the near term followed by a massive rally in the medium and longer term.
Stay informed my friends.
-Doc