While volatility in the Bitcoin market has fallen to one of its lowest levels in recent years, DeFi researcher Sherlock noted that the current squeeze has resulted in strong price movements in past instances.
According to data shared by Sherlock, Bitcoin’s 14-day trading range has narrowed to a level narrower than 99.5% of historical data. The researcher stated that he identified 19 independent periods in the past where volatility was similarly compressed, and in all of these periods, the Bitcoin price moved by at least 12.5% in the following 45 days.
The median maximum price movement seen in past examples was 21.5 percent, while the average maximum movement was 27.9 percent.
According to Sherlock, the current squeeze began on July 16th when Bitcoin was at $63,830. If historical trends repeat, Bitcoin could reach either $71,809 or $55,851 by August 30th, representing a move of approximately 12.5%.
However, the researcher cautioned that the data did not provide a clear advantage in predicting the direction of the movement. Of the 19 consolidation periods examined in the past, Bitcoin initially broke out upwards in 9 of them and downwards in 10.
Therefore, Sherlock stated that the current volatility squeeze increases the likelihood of a strong price move, but the direction of the move cannot be reliably predicted using historical data.
*This is not investment advice.