- Ethereum price is facing a Bollinger Bands squeeze as market uncertainty grows.
- The Pectra upgrade is set to drive sentiment in the market that may fuel a price surge.
The Bollinger Band, a key technical indicator, suggests possible volatility in the Binance-listed Ethereum-Bitcoin (ETH/BTC) ratio. This setup hints at a market shakeup amid the upcoming Ethereum Pectra upgrade, scheduled for May 7.
Tight Bollinger Band Squeeze on ETH/BTC Chart
According to TradingView data, the Bollinger Bands are showing a narrow squeeze on the ETH-BTC chart, the tightest they have been since June 2020.
Simply explained, Bollinger Bands are volatility bands placed two standard deviations above and below the 20-day simple moving average of an asset’s price. A squeeze occurs when the bands contract tightly around the price, suggesting low volatility and a period of consolidation.
Typically, the market builds energy during the squeeze, which is eventually released in either direction, leading to a volatility explosion. Thus, the current squeeze shows that Ethereum could soon experience increased volatility against Bitcoin.
Crypto traders aiming to profit from a volatility surge should watch how the price breaks out of the bands. In past cycles, big moves often happened in the same direction.
The volatility bullish signal comes just a few days before the long-anticipated Ethereum’s Pectra upgrade goes live on the mainnet. As summarized in our earlier news story, Pectra aims to improve the scalability of the Ethereum network and validator operations, which may spur market activity. The upgrade is also designed to improve performance and the overall user experience.
Pectra, anticipated to debut on May 7, increases the amount of ETH a validator can stake. Once the update goes live, validators can stake 2,048 ETH, a huge increase from the current allowed 32 ETH. The number of “blob” data units per block will also increase from 3 to 6, allowing a maximum of 9.
Furthermore, Pectra will enable high efficiency of smart contracts following the transition to the EVM Object Format (EOF). Layer-2 networks will also benefit as Pectra solidifies blobs as the standard for rollup data posting.
Ethereum Still Bleeding
Market analysts and participants anticipate that the upcoming Pectra upgrade will ignite a rally in the price of ETH. With less than two days to the launch, the price of ETH has failed to respond to the positive sentiments in the market.
As of this writing, the ETH price was trading at $1803, down 1.64% in the past 24 hours. This daily decline resulted in ETH dropping by 0.79% and 0.48% on the weekly and monthly charts.
Despite the plummeting ETH price, investors remain confident in the asset. This is indicated by the rising daily trading volume, which increased by over 14% to $9.88 billion.
Moreover, technical analysis hints at a bold bullish rally, as we discussed in a previous article. Ethereum is showing a falling wedge, a classic bullish pattern with a target price as high as $2,875.
