Although Bitcoin market volatility has fallen to one of its lowest levels in recent years, DeFi researcher Sherlock noted that such "squeezes" have led to strong price fluctuations in the past.
According to data provided by Sherlock, Bitcoin's 14-day trading range has narrowed to a level lower 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 these periods, the price of Bitcoin changed by at least 12.5% within the subsequent 45 days.
The median maximum price change observed in the previous examples was 21.5 percent, while the average maximum change was 27.9 percent.
According to Sherlock, the current squeeze began on July 16, when Bitcoin was priced at $63,830. If historical trends repeat, Bitcoin could reach either $71,809 or $55,851 by August 30, which would represent a move of approximately 12.5%.
However, the researcher cautioned that the data does not provide a clear edge in predicting the direction of the move. Of the 19 consolidation periods examined previously, Bitcoin initially broke upwards in 9 cases and downwards in 10.
Thus, Sherlock stated that the current decline in volatility increases the probability of a strong price move, but the direction of this move cannot be reliably predicted using historical data.
*This is not investment advice.
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