Bitcoin Volatility Index: Understanding Market Dynamics

This chart displays Bitcoin's price alongside a volatility measure based on Bollinger Band Width (BBW).

How It Works

Volatility is calculated as the percentage difference between the upper and lower Bollinger Bands relative to the middle band (typically a 20-day SMA):

BBW = [(Upper Band - Lower Band) / Middle Band] × 100%

How to Use

• High Volatility: Signals large price swings and potential trend reversals.
• Low Volatility: Indicates calm markets, often preceding major breakouts.
• Volatility Contraction: Watch for upcoming significant price moves.
• Volatility Expansion: Often marks strong trends or market dislocations.

Adjust the Bollinger Band window to explore volatility patterns over different timeframes. Use this index to assess risk, time entries, and manage position sizing.