According to Golden Finance, technical analyst Tony Severino said that Bitcoin's Bollinger Bands are currently one of the three narrowest in history, indicating that a major price change is about to come. Bollinger Bands are an indicator used to measure price volatility and trend direction. When the Bollinger Bands shrink to the narrowest level, it is usually called a "Bollinger Squeeze", which means that the market is in a state of low volatility and may create conditions for a strong breakthrough.
Historical data shows that when Bollinger Bands contract, Bitcoin’s price tends to move significantly. For example, there were similar contractions in April 2016 and July 2023, followed by significant price increases. However, the contraction of Bollinger Bands can only show the possibility of volatility and cannot predict the direction of change, which means that the market may usher in a sharp rise or a sharp decline.
Statistics show that Bitcoin rose in seven of the nine cases after the Bollinger Bands contracted.
Note: Bollinger Bands consist of a middle band, an upper band, and a lower band, and are used to measure market volatility. When the Bollinger Bands become narrower, it indicates that the market is in a period of low volatility, while when the Bollinger Bands become wider, it indicates increased volatility. Bollinger Squeeze refers to the situation where the Bollinger Bands are extremely contracted, which is a precursor to a market breakthrough.
