Just over three months ago, an indicator called "Bollinger bandwidth" based on bitcoin's weekly price changes signaled a volatility boom. Sure enough, volatility picked up prior to the recent debut of spot BTC ETFs in the U.S.

Now, the monthly chart Bollinger bandwidth has carved out a pattern that preluded Bitcoin's near-vertical rallies of 2016 and late 2020.

Created by John Bollinger in the 1980s, Bollinger Bands comprises three bands. The middle one is the 20-period simple moving average of the asset's price. The upper band is two standard deviations above the middle band and the lower band is two standard deviations below it.

The Bollinger bandwidth refers to the spread between upper and lower bands measured as the percentage of the moving average. A narrow width is akin to a tightly compressed spring about to make a big move in either direction.

Since inception, 1% has been a major low for Bitcoin's monthly chart Bollinger bandwidth, with subsequent upturns coinciding with prolonged price rallies or bouts of upside volatility.

BTC

(TradingView/CoinDesk)

The bandwidth has recently bounced from 1% in a positive development for bitcoin bulls.

Though the latest bandwidth pattern resembles developments before previous bull runs, the indicator, by itself, only signals that a major price move is due but doesn't tell us anything about the direction.

In other words, past results do not guarantee future performance, and the possibility of a large move to the downside cannot be ruled out.

That said, most analysts are bullish on the cryptocurrency, expecting the recently launched spot ETFs to accelerate adoption and lift prices to new record highs above $69,000 in the next 12 months


All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

Recommended content


Recommended Content

Editors’ Picks

Cardano eyes recovery as it retests key support, funding rate and bullish bets signal optimism

Cardano eyes recovery as it retests key support, funding rate and bullish bets signal optimism

Cardano recovers slightly by 4%, trading around $0.70 on Tuesday after falling nearly 7% the previous day. On-chain metrics signal further recovery as ADA’s funding rate turns positive while its bullish bets reach the highest level over a month.

More Cardano News
Bettors mount pressure on XRP amid signs of a price bottom in on-chain indicators

Bettors mount pressure on XRP amid signs of a price bottom in on-chain indicators

Ripple's XRP declined 10% on Monday, trading around $1.96 at press time after odds of its price plunging below $2.00 skyrocketed to 81% on prediction platform Polymarket. Despite the high risk-off sentiment, XRP's 30-day Market Value to Realized Value (MVRV) Ratio indicates prices may have found a bottom.

More Ripple News
The crypto market cap dips to $2.44 trillion while Mt. Gox moves 11,833 BTC worth $932 million

The crypto market cap dips to $2.44 trillion while Mt. Gox moves 11,833 BTC worth $932 million

The crypto market continued its ongoing downleg as the week started, as its market cap capitalization reached a low of $2.44 trillion on Tuesday, levels not seen since early November. This price crash has triggered a wave of liquidations of over $937 million in the last 24 hours.

More Cryptocurrencies News
Bitcoin hits multi-month lows as crypto, stocks witness heightened risk-off sentiment

Bitcoin hits multi-month lows as crypto, stocks witness heightened risk-off sentiment

Bitcoin fell to $78,000 on Monday, marking a 27% decline from its all-time high, as crypto and stocks stretched their combined market cap losses to $6 trillion. The selling pressure is largely due to a growing correlation between the asset classes and a shift in investor sentiment toward a risk-off strategy.

More Bitcoin News
Bitcoin: Will Trump's Strategic Bitcoin Reserve and White House Crypto Summit support BTC recovery?

Bitcoin: Will Trump's Strategic Bitcoin Reserve and White House Crypto Summit support BTC recovery?

Bitcoin price extends its decline on Friday, falling over 5% so far this week. BTC uncertainty and volatility spikes liquidated $1.67 billion as the first-ever White House Crypto Summit takes place on Friday.

Read full analysis
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

BTC

ETH

XRP