Those who can see this are probably traders looking to take their crypto market to the next level. We've discussed fundamental analysis and live trading strategies before; today, let's deepen our perspective and analyze the logic behind Bollinger Band opening and closing changes.

Many people simply say "an expanding band indicates a trend, and a contracting band signals accumulation," but that's just the surface. The real key is: why does this happen? What's the underlying principle?

Honestly, after years of navigating the crypto market, the core method for catching tops and bottoms is understanding this—when you can predict turning points, you no longer have to be led by the market. I hope sharing this today can help everyone avoid detours.

**Underlying Logic: Volatility Speaks**

The expansion and contraction of Bollinger Bands fundamentally reflect changes in market volatility. In traditional finance, a 2-standard deviation covers about 95.4% of price movements, and this theory works well. But the crypto market is different—its volatility is 3 to 5 times that of traditional markets, so under the same indicator system, the probability that prices stay within the bands is only about 85%.

What does this mean? It means that when you see "price breaks out of the band and doesn't retest" or "the band expands to the extreme and then suddenly contracts," you should be alert. This is a signal that a reversal may be imminent.

**First Signal: When Expansion Reaches Its Limit, Expect Reversal**

I call this "trend exhaustion." When the price runs wildly along the upper or lower band, and the Bollinger Band expands to more than twice its recent maximum, then—here's the key—if the upper band starts to bend downward or the lower band begins to bend upward, and the price hasn't yet broken below or above the middle band, it's time to consider reducing your position.

Last year's Bitcoin drop from 69,000 to 45,000 was a classic example of this pattern. The seemingly unstoppable rally expanded the band to its extreme, then suddenly reversed.