Bitcoin has been stuck in a sideways trend since mid-January, but a breakout could be just around the corner. The Bollinger Band Width (BBW) indicator suggests that the market is about to experience a period of high volatility.
What is the BBW?
The BBW is a technical indicator that measures the volatility of an asset. It is calculated by dividing the difference between the upper and lower Bollinger Bands by the middle Bollinger Band. When the BBW is low, it means that the Bollinger Bands are close together, indicating a period of low volatility. When the BBW is high, it means that the Bollinger Bands are far apart, indicating a period of high volatility.
Why is the BBW important?
Historically, periods of low BBW have often been followed by periods of high volatility. This is because the market is trying to find a new equilibrium price after a period of consolidation.
What does this mean for Bitcoin?
The current low reading on the BBW suggests that the Bitcoin market is about to experience a period of high volatility. This could lead to a sharp increase in Bitcoin’s price, either up or down.
What should investors do?
Investors should be prepared for a big move in Bitcoin’s price. They should have a plan in place for both a bullish and bearish scenario. They should also be aware of the key support and resistance levels at $43,340 and $39,800, respectively.