Definition. Bollinger Bands plot a 20-day simple moving average of the Bitcoin price together with an envelope drawn two standard deviations above and below it. The envelope expands and contracts with the dispersion of price around its own trailing mean, so its width is a direct read of realised price variability over the past 20 days.

Technical. All three series derive from hourly closes. The middle band is a 480-bar simple moving average, 480 hours being exactly 20 days, and the outer bands add and subtract two times the 480-bar standard deviation of the same series. Sampling hourly rather than daily changes the result only marginally - the plotted band edges differ from the classic twenty-daily-close construction by well under one percent on nine days in ten - while allowing the bands to update every hour rather than stepping once a day. The dispersion term is a sample standard deviation. All three series require a full window and therefore begin 20 days after the price series starts. The price axis is linear, since a two-standard-deviation envelope is additive in dollars and is only visually symmetric on a linear scale.

Interpretation. Band width is the primary reading: a narrow envelope marks a period of compressed variability, a wide one a period of expansion. Price sits inside the envelope less often than a normal distribution would imply, and the excursions are asymmetric, occurring above the upper band somewhat more often than below the lower one, reflecting the upward drift and fat tails of the price series. A touch of either band therefore describes the current move relative to the trailing 20 days rather than a boundary price is expected to respect.

Notes. The 20-day window and two-standard-deviation width are the conventional parameter set. For longer-horizon moving-average context see Technical Pricing Models; for a momentum reading over a comparable window see Relative Strength Index (RSI-14).