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Bitcoin Indicator That Forewarned Late 2023 Volatility Explosion Is Lighting Up Again
Bitcoin's Bollinger bandwidth has narrowed to levels that have historically preceded volatility explosions.

- The gap between bitcoin's volatility bands has narrowed to 20%.
- A similar reading preceded Bitcoin's late 2023 surge.
Traders bored of bitcoin BTC
Bollinger bands are volatility bands placed two standard deviations above and below the 20-day/week simple moving average of an asset's price. The bandwidth, an unbound oscillator, is derived by dividing the spread between the volatility bands by the 20-period SMA.
Bitcoin's Bollinger bandwidth has declined to 20% on the weekly chart, a level last seen days before BTC exited its then multi-month trading range of $25,000 to $32,000 in late October. Prices topped the $40,000 mark by year-end and rose to record highs above $70,000 in March this year.

The latest reading of 20% follows four months of trading between $60,000 and $70,000, barring occasional brief dips to $55,000.
The bandwidth flashed a similar reading ahead of the volatility explosions in November 2018, October 2016, mid-105 and mid-2012, as CoinDesk discussed in October.
Volatility is said to be mean-reverting. So, a narrower bandwidth, representing price stability, often precedes a breakout in either direction or burst of volatility. On the flip side, high bandwidth indicates a cooling period on the horizon.
Omkar Godbole
Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.
