“A Standard Deviation-Based Indicator Points to Renewed Volatility Explosion in XRP and BTC.”, – WRITE: www.coindesk.com
That’s the message from a key volatility indicator Called Boollinger Bandwidth. Bollinger Bands are volatility Bands Set at Plus Two and Minus Two Standard Deviations Above and Below The 20-Period MOVING AVERAGE (SMA) OF AASET’S MARKET PRICE. The Bandwidth Measures of the Space Between These Bands As A Percentage of the 20-Day Moving Average.
XRP and BTC with Bollinger Bandwidth. (TradingView/Coindesk)
In the Case of XRP, The Bollinger Bandwidth Has Narrowed to It ITS LOWEST LEVEL SINCE OCTOBER 2024 on the 4-Hour Chart, WHERE Each Candle Represents Price Action for A FUR-HOUR. The 4-Hour Interval Is Quite Popular in The 24/7 Crypto Market, ALLOWING Traders to Analyze and Predict Short-Term Price Movements. Bitcoin’s 4-Hour Chart Mirrors the Bollinger Band Width Pattern in XRP.
The Long-Held Belief is that a tighter Bollinger Band Width, Reflection A quiet period in the Market, is akin to a compressed spring for signitificant movement.
Durying These Calm Phases, The Market Acumulates Energy That Is Eventually Released Once A Clear Direction Is Establisshed, Often Leading To Dramatic Rallies ORP PRICE DCLINES. Both XRP and Bitcoin Surged in November-December Following An Extended Range-Bound Period That Left Their Bandwidth at Levels Comparable to Those Observed Today.
That said, Tighter Bands do not always Indicate a bullish volatility explosion; They can also foreshadow a sell-off. For Example, The Bands Tighted in October 2022, Signaling A Significant Move AHEAD, WHICH MATERIALIZED ON THE DOWNSIDE After FTX WENT BST.
It Remains to be Seen Whther this Latest Spring Compression Will Trigger Bullish Volatility or Lead broth tokens Into a tailspin. The recent of hawkish comments from federal reserve’s chairman Jerome Powell and selling by some whuses Favor the Latter.
Stay Alert!
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