Both XRP and Bitcoin are forming confirmed bullish patterns that are good indicators that a big move up or down is imminent. Current market volatility is importantly defined by Bollinger Bandwidth, which has recently contracted to the lowest levels since October 2024. This contraction follows a pattern we’ve observed in close to parallel form in November and December. It would indicate a coming breakout or breakdown for two of the most popular cryptocurrencies.
The Bollinger Bandwidth is an indicator that shows the spread between the upper and lower Bollinger Bands, calculated as a percentage of the 20-day moving average. It serves as a very effective tool for predicting short-term price movements. This feature is particularly useful in the volatile world of cryptocurrency. Crypto traders frequently apply the 4-hour time frame with the Bollinger Bandwidth to seek trade setups.
Low volatility is suggested by a tightening Bollinger Bandwidth. This quietness often foreshadows volatility in the form of big price swings. This unexpected response to such an important driver for change is very much like a compressed spring, where latent energy releases itself all at once. In the past, however, such contractions have foreshadowed both positive rallies and negative sell-offs, so it’s important for traders to stay on their toes here.
When the Bollinger Bandwidth shot up like this in October 2022, it preceded big price action for XRP and Bitcoin — to the upside and downside, respectively. Now, the crypto community is understandably on high alert. They’re closely looking at whether or not history will repeat itself, with the indicator once again approaching similar levels.
The current Bollinger Bandwidth for XRP and Bitcoin on the 4-hour chart is at its lowest point since October 2024. This level is similar to the squeezed condition we experienced during November and December. Accordingly, many analysts think a major action is imminent.
Another useful indicator to indicate price movement in the crypto market is the Bollinger Bandwidth. By keeping an eye on this indicator, traders can better understand when the market may be more volatile and plan their trades around it. Just remember that the Bollinger Bandwidth isn’t an infallible predictor. As with any technical indicator, always use them in conjunction with other technical indicators and overall market conditions to help determine your investment decision.
