The calm before the storm?
Bitcoin has been remarkably stable over the last several weeks and months and that likely means a big move is coming.
Historically, in any market, periods of low volatility are often followed by periods of high volatility and that is definitely true in the bitcoin markets.
The bollinger bands are currently compressing and have been for weeks now.
We have seen this type of pattern play out numerous times over the last couple years and each time we saw a move in the $2k range follow shortly after.
Check out how things stand currently:
(Source: https://www.tradingview.com/symbols/BTCUSD/)
As you can see, the bollinger bands are tightening and the bandwidth is now at .08 which has been a trigger point for a spike in volatility in the past.
Now, here are several other examples where we saw similar setups to what we are seeing now.
In each instance we saw the bandwidth get very close to .08 before a sharp move of roughly $2k soon followed...
Keep in mind that the moves went both up and down:
(Source: https://www.tradingview.com/symbols/BTCUSD/)
Given the fact that the moves that broke out to the downside happened during the bear market while the breakouts to the upside happened in the flat to bull market phases, there is a probably a better than 50/50 chance this current setup ultimately resolves to the upside.
The large number of expiring BTC options contracts may also explain why bitcoin has been range bound these last few weeks:
The max pain for the majority of these positions happens as long as BTC stays below $10k through the end of this week.
Given that market dynamic, we may see bitcoin continue to go sideways and remain within this low volatility range before it ultimately explodes to the upside next week.
Right after all these open option positions have expired.
That tends to be how the markets work.
Prices tend to do what the least amount of people are positioned for.
Either way, given the macro backdrop and the news of late, bitcoin is in a great position for a sizable rally in the very near future.
Stay informed my friends.
-Doc