ETH Price to See Volatility Breaking Out of Bollinger Band Squeeze

The world’s second-largest cryptocurrency Ethereum has been showing signs of weakness for a while as the ETH price dropped to $1,650 levels last week. On the technical chart, ETH continues to show the signs of weakness.

Based on data gathered by Bloomberg since 2018, Ether’s Bollinger bandwidth is currently nearing its narrowest point. The Bollinger bandwidth, representing the difference between the upper and lower bands in a Bollinger analysis—a common method for assessing volatility—has tightened.

Market observers with a technical analysis perspective often interpret a constricted Bollinger bandwidth as a precursor to the upcoming volatility in an asset. Additionally, Ether has crossed below the lower band, suggesting that an increase in volatility could potentially result in losses instead of gains.

So far in the month of August, the ETH price is already down by 12%. The risk assets have come under pressure amid the Fed’s projections of continuing higher interest rates for longer. As a consequence, Ether has formed a head-and-shoulders price pattern, a technical pattern indicating possible further decreases and suggesting a potential downside target of $1,100.

All Eyes on Ethereum Futures ETF

Speaking to Bloomberg, Caroline Mauron, co-founder of OrBit Markets, said that the period of reduced activity during the summer seems to have concluded, and there’s a sense of unease in the market after significant price fluctuations last week in a low liquidity environment.

Some traders believe that Ether’s price might go down a bit soon due to big-picture economic factors. But there are other traders who are thinking more long-term. They are getting ready for the possibility of making money because soon, the first US investment funds that focus on Ether’s future value might be approved.

If the US Securities & Exchange Commission gives the green light, the first of these ETFs might possibly launch around October 11, analysts James Seyffart and Eric Balchunas from Bloomberg Intelligence suggested.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.