Dogecoin, Tesla CEO Elon Musk's favorite cryptocurrency, has seen sharp up and down movements.
This includes the DOGE shares made by Elon Musk.
However, Dogecoin has had a quieter year this year than its two biggest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH).
According to the news of Coindesk, Fidelity analysts examining Dogecoin's price performance applied the Bollinger bands indicator to the DOGE chart.
According to analysts, the Bollinger bands indicator shows that there may be a calm before the storm in DOGE.
Bollinger bands are defined as volatility lines placed two standard deviations above and below the 20-day SMA of cryptocurrency prices.
If the width between the bands increases, this indicates increased volatility, while the narrowing of the distance between the bands indicates decreased volatility.
Accordingly, analysts "usually broad or high bandwidth indicates that a continued uptrend or downtrend is coming to an end." said.
Based on these data, analysts stated that Bollinger bandwidth has narrowed in Dogecoin, accordingly:
“We at Fidelity interpret an unusually low bandwidth in DOGE as the DOGE market may be about to start a significant move in both directions.
Hence, Dogecoin may see an explosion of volatility soon, in line with its trend of oscillating between bandwidth contraction and expansion.”
Because according to analysts, the bandwidth has narrowed in DOGE, and this means that the bands will expand and there may be sharp movements in the down or up direction.
As can be seen from the Dogecoin chart from Tradingview, the width between the bands has been very tight lately and the bandwidth has dropped to 0.06.
Dogecoin, which has increased by 1.32% in the last 24 hours, is at $ 0.7336 at the time of writing.
Founded in 1946, Fidelty is one of the world's largest asset managers, holding $10.3 trillion in assets under management as of December 2022.
*Not investment advice.