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Bitcoin, the leading cryptocurrency by market capitalization, could be on the verge of an extremely volatile move, according to the Bollinger Bands indicator, which is closely followed by chartists.
The flagship cryptocurrency remains in the mid-$76,000 range for now, CoinGecko data shows.
The Bollinger Band squeeze, explained
On X, Elon Musk's social media platform, prominent cryptocurrency trader Josh Olszewicz has said Bitcoin's monthly Bollinger Bands are currently the "tightest ever."
The indicator, which was developed by financial analyst John Bollinger several decades ago, is useful for measuring market volatility.
The tool includes a simple moving average (the middle band) flanked by an upper and lower band. These bands show deviations from that average.
The bands contract toward each other when a certain asset remains in a tight tight range for a prolonged period of time. This is colloquially known as a "squeeze."
The chart shared by Olszewicz shows that the distance between these bands has plunged to historic lows on the monthly timeframe.
Hence, it would not be far-fetched to suggest that this period of consolidations could lead to a violent, volatile move.
Holding crucial support
Bitcoin remains rather resilient on the daily timeframes despite some broader market turbulence.
Crypto commentator 360Trader noted that BTC is successfully holding support at $76,865 despite a strengthening U.S. dollar (USD) cruising in global markets.
In fact, the flagship cryptocurrency is now in the process of forming a bullish "higher low" setup on the charts.
This shows that "institutions aren't selling into strength" and are instead accumulating or holding their positions.
Bitcoin can successfully defend this key psychological and technical support floor, it might end up staging an impressive rally.
Dan Burgin
