Bitcoin (BTC) and XRP are on the cusp of significant price movement, as technical indicators point to an emerging bullish trend. Bollinger Bandwidth – an indicator that tracks market volatility – recently fell to its lowest point since October 2024. Unfortunately, this trend holds true for both cryptocurrencies. This latest development has traders on the edge of their seats and waiting in anticipation for that next big move.
Bollinger Bandwidth is an indicator that measures the percentage of space between the Bollinger Bands in relation to the 20-day moving average. Bollinger Bands Trading Bollinger Bands themselves are volatility bands, set two standard deviations above and below an asset’s 20-period moving average. A tightening Bollinger Bandwidth is often a sign of an impending period of low market volatility. It’s like a compressed coil, ready to release power at any second.
As shown above, Bitcoin’s current low Bollinger Bandwidth has been a pattern recently seen in XRP. XRP’s floor catch public attention on the 4-hour chart. Crypto traders commonly use this timeframe to gauge price action for potential buy/sell opportunities in the 24/7 market. Getting to such low levels in Bollinger Bandwidth can be an indication of a market energy accumulation, often leading the way to powerful price transitions.
In the past, narrowed Bollinger Bands have been followed by major price moves. Indeed, after the collapse of FTX in October 2022, we saw a reversion to this same pattern. It has triggered some major rallies. A narrow Bollinger Bandwidth can ignite explosive moves. Unfortunately, it is a leading indicator for oncoming sell-offs.
Acting as one of the primary volatility indicators, Bollinger Bandwidth allows traders to measure the intensity of future market oscillations. It’s based on the 20-day moving average, expressed as a percentage of that average and shows the distance between Bollinger Bands. The tool has become one of the most widely used by participants across the crypto markets for their capability to help analyze and predict short-term price movements.
