A key volatility indicator for Bitcoin (BTC) has narrowed to its tightest measurement on document, a sample that was adopted by a multi-month rally in earlier bull and bear markets. Will the Bollinger Bands indicator name the market backside once more?
File Bitcoin Bollinger Band compression hints at volatility
Analyzing the month-to-month Bitcoin chart, crypto analyst Dorkchicken famous that BTC’s Bollinger Bands are at the moment at their “tightest” degree on document. Such circumstances have repeatedly led to bullish breakouts, with the one prior downtrend from related circumstances occurring in 2022, through the drop to $16,000 from $20,000.
Bollinger Bands measure value volatility, and excessive compression typically results in a pointy growth. The analyst added that there are larger odds of an upside development as soon as growth begins.
Quite the opposite, Bitcoin dealer Nunya Bizniz pointed to an approaching 50- and 200-period easy shifting common (SMA) demise cross on the three-day chart. A demise cross happens when the shorter-term shifting common falls under the longer-term common, signaling weak value momentum.
Throughout the previous three cases, the sample marked drawdowns of round 50% over the next one to 6 months and aligned intently with ultimate cycle capitulation phases.
An analogous path might indicate a possible backside between March and August close to $33,000. The dealer additionally mentioned that BTC has spent 110 days under its short-term holder price foundation of $89,800. Throughout earlier cycle lows, the value sometimes remained below that degree for practically 200 days on common.
Market analyst Ardi additionally famous that the lengthy futures publicity from retail merchants has elevated on every dip to $68,000 from $88,000. Presently, 72% of tracked retail accounts are lengthy right into a descending trendline.
Whereas this displays early indicators of market optimism, every current surge in lengthy positioning has been adopted by a pointy sell-off. With positioning as soon as once more elevated, these longs stay susceptible to liquidation, rising the danger of a liquidity hunt if the value strikes decrease.
Associated: Bitcoin ‘roadmap to backside’ says $58.7K Binance price foundation now essential
BTC’s Sharpe ratio is fascinating, however $70,000 stays the extent to crack
Crypto analyst MorenoDV mentioned that Bitcoin’s short-term Sharpe Ratio has dropped to -38.38, matching ranges final seen in 2015, 2019, and late 2022.
The Sharpe ratio measures the risk-adjusted return, and deeply unfavourable readings mark durations of deep drawdown and volatility. Every extraordinarily low ratio sign has aligned intently with the foremost cycle lows, resulting in sturdy BTC rallies, with the analyst noting that the present value vary could also be a “generational purchase zone.”
Glassnode knowledge requires affirmation by means of a stronger BTC demand absorption. Since early February, every transfer above the $70,000 degree has stalled as the web realized earnings exceeded $5 million per hour.
Glassnode added that in Q3 2025, profit-taking between $200 to 350 million per hour didn’t interrupt the advance to new highs in This fall.
Associated: ‘Resilient’ Bitcoin holders defend BTC, however bear flooring sits 20% decrease: Glassnode
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