One important technical indicator suggests that the primary cryptocurrency might be approaching a period of intense short-term volatility.
However, the exact direction of the next big move remains unclear.
Fasten Your Belts
The popular analyst Ali Martinez disclosed on X that BTC’s Bollinger Bands on a 3-day scale have started squeezing. Such a development typically occurs amid periods of low volatility and has historically been followed by a huge price swing.
It is important to note that the setup has been a precursor of both strong rebounds and violent plunges. In mid-March, for instance, the Bollinger Bands (on a monthly basis) tightened to levels never seen before. Just a few days later, BTC plummeted from nearly $75,000 to around $65,000.
It was the complete opposite at the beginning of May last year. The Bollinger Bands squeezed at a time when the cryptocurrency was trading at less than $95,000, while later that month it exploded above $110K.
Given the ongoing bear market, some might speculate that a move to the downside is the more likely option for BTC in the near term. The upcoming FOMC meeting supports that thesis.
The US Federal Reserve will reveal its interest-rate decision on July 29, and many X users noticed that each announcement this year has been followed by a Bitcoin sell-off. We have yet to see whether this pattern will play out again or will finally come to an end.
Meanwhile, several analysts believe the cycle’s bottom has yet to arrive, with some anticipating a drop to as low as $39,000 before the next bull run begins.
How About a Pump?
BTC held steady at around $65,000 over the weekend and the first business day, yet in the past several hours the bears regained control and pushed it south to the current $63,300 (according to CoinGecko).
Due to the sudden plunge of approximately two grand, its Relative Strength Index (RSI) has drastically fallen to an oversold level of 21. Such territory is considered bullish and often interpreted as a buying opportunity. The technical analysis tool runs from 0 to 100, and anything above 70 serves as a warning for an impending correction.
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Source: https://cryptopotato.com/bitcoin-is-coiling-for-an-explosive-move-but-which-direction/
