Think of XRP and Bitcoin (BTC) price movements like a tightly wound spring, ready to unleash pent-up energy.

This is all signaled by something called the Bollinger Bandwidth, a key indicator of market swings. Imagine Bollinger Bands as rubber bands around the average price, stretching out when prices get volatile and squeezing in when things are calm. They are essentially volatility bands, sitting two standard deviations above and below the 20-period moving average (SMA) of an asset’s price. The bandwidth itself then tells us how tight or loose these “rubber bands” are, shown as a percentage of the 20-day moving average.

Looking specifically at XRP, the Bollinger bandwidth has tightened to its narrowest point since October 2024, as seen on the 4-hour chart. For those new to charts, each “candle” here represents four hours of price movement. This 4-hour view is a favorite among crypto traders in the always-on crypto market, giving them a window to analyze and anticipate quick price changes. Interestingly, Bitcoin’s 4-hour chart is showing a very similar squeeze in its Bollinger bandwidth, just like XRP’s.

Now, here’s the common wisdom: when Bollinger Bands squeeze tightly like this – showing the market has been quiet for a while – it’s often seen as that compressed spring we talked about, coiled and ready to jump.

Think of these quiet periods as the market building up energy. Once the market decides which way it’s going – up or down – that energy gets released. This can cause big, fast price jumps, either soaring rallies or sudden drops. Remember when both XRP and Bitcoin took off in November and December? That surge followed a long period of sideways trading, where their bandwidths were just as tight as they are now.

However, it’s crucial to remember tighter bands are not always a ticket to a price explosion upwards. They can also signal a coming sell-off. Think back to October 2022 – the bands squeezed then too, hinting at a big move. And what happened? Prices plunged when FTX collapsed.

So, will this current squeeze lead to another bullish breakout, or will XRP and Bitcoin take a nosedive? Recently, Federal Reserve Chairman Jerome Powell made some hawkish comments, and we’re seeing some big players selling off. These signs point toward the latter – a potential downturn.

Stay alert!