Bitcoin is in a difficult situation today, despite a price drop of 0.32% to around $29300, the narrowing of the Bollinger band indicator indicates that the market is brewing a major change
Bitcoin is in a difficult situation today, despite a price drop of 0.32% to around $29300, the narrowing of the Bollinger band indicator indicates that the market is brewing a major change.
Bitcoin has been hovering within a narrow trading range in recent weeks, which did not change on August 15th. Despite the price drop on that day, the overall market trend remained stable. Since July 24th, BTC/USD has been rebounding in the range of 28500-30000 US dollars, as shown in the following figure:
Bitcoin prices show the most stable since November 2016
In addition to stable prices, Bitcoin's annualized actual volatility and derivative trading volume have also shown a downward trend. According to Glassnode's data, as of August 14th, the 30-day average annual actual volatility of Bitcoin has dropped to 48.51%, the lowest level in seven years.
At the same time, the average 30-day trading volume of Bitcoin in the options and futures markets has also dropped to its lowest level since January 2023, at approximately $487.37 million and $167 million, respectively.
Why has Bitcoin prices remained relatively stable?
The stability of the Bitcoin market and the decrease in trading volume reflect the conflict of short-term biases among traders. In other words, most Bitcoin investors are uncertain about the future trend of Bitcoin when weighing various market factors.
For example, the increasing expectations of Bitcoin ETFs being approved in the United States have put bears in a difficult position, keeping Bitcoin at a support level of $28500 since July.
On the other hand, concerns that the Federal Reserve may further raise interest rates at its upcoming meeting have increased investors' interest in the US dollar.
The US dollar index (DXY), which tracks the US dollar against a basket of major foreign currencies, has rebounded 3.5% from its local low of 99.5 in July. Meanwhile, Bitcoin has rebounded from a local top of around $31800.
Therefore, the stable trend of Bitcoin may continue until the next Federal Reserve meeting on September 19-20.
Classic indicators predict major trends in Bitcoin
From a technical perspective, Bitcoin is preparing for a large-scale breakthrough or collapse in the coming weeks.
The latest indicator indicating a major trend is the Bollinger Line of Bitcoin. The contraction of the Bollinger band usually precedes a significant increase in volatility, which may lead to Bitcoin breaking through the range of $28500- $30000. It is worth noting that the Brinell line is not a trend indicator and cannot predict the direction of BTC's next breakthrough.
However, market analysts and traders, Trader Tardigrade, have deep confidence in the rise of the Bitcoin, referring to historical fractals.
It is worth mentioning that Bitcoin has been hovering within a narrow trading range of $300- $450 from November 2015 to May 2016. Subsequently, it erupted, triggering a strong bull market and ultimately reaching a peak of nearly $20000 in December 2017.
At the same time, bears may hope for an upward wedge shape, which does suggest a reversal to $15000 in the coming months on a larger time frame chart.
However, if the BTC price remains above the 20-day moving average (the orange wave in the middle of the Bollinger Line weekly line), which is around $28650, this collapse may be avoided.
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