Bitcoin seems to be on the point of an important price movement and the data suggest that volatility could return in style. With the action of Bitcoin prices that has been stopping in recent weeks, we analyze the key indicators to understand the potential scale and the direction of the imminent move.
Volatility
An excellent starting point is the volatility of Bitcoin, which keeps trace of the action and volatility of prices over time. By isolating last year’s data and focusing on weekly volatility, we observe that recently the Bitcoin price has been relatively flat, in the balance in the interval of $ 90,000. This prolonged lateral action has led to a dramatic drop in volatility, which means that Bitcoin is experiencing some of his most stable price behaviors in recent history.
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Historically, so low volatility levels are rare and tend to be short -lived. When they looked at previous cases in which volatility was so low, Bitcoin followed with significant price movements:
An event from $ 50,000 to a historic maximum of $ 74,000.
A drop from $ 66,000 to $ 55,000, followed by another increase at $ 68,000.
A stagnation period of about $ 60,000 before an increase of $ 100,000, its current historical maximum.
Whenever volatility descended at this level, Bitcoin has undergone a move of at least 20-30%, if not more, in the following weeks.
Bollinger bands
To confirm it further, the indicator of width of the Bollinger bands, a tool that measures volatility by monitoring the deviation of prices from a mobile average, also indicates that Bitcoin is rolled up for a large move. The quarterly bands have currently been at their closest levels since 2012, which means that price compression is extreme. The last time it happened, Bitcoin recorded a 200% increase in prices within weeks.
By examining the previous occurrences of similar Bollinger band configurations, we find:
2018: a 50% drop of $ 6,000 to $ 3,000.
2020: a breakout from $ 9,000 to $ 12,000, creating any rally at $ 40,000.
2023: a slow accumulation phase of about $ 25,000 before a quick jump to $ 32,000.
Potential direction
Understanding the direction is more difficult than predicting volatility, but we have clues. A strong indicator is the yoy of the US dollar resistance index (Dxy), which is historically moved inversely to Bitcoin. Recently, the Dxy gathered hard, but Bitcoin has maintained its position. This suggests that Bitcoin has an underlying force, even in less favorable macro conditions.
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In addition, political factors can play a role. Historically, when Donald Trump came in office in 2017, the Dxy decreased and Bitcoin saw a huge bull run from $ 1,000 to $ 20,000. With a potentially similar configuration that is taking place in 2025, we could see a repetition of this dynamic.
Etf afflusted
In addition, the affluses of Etf Bitcoin, a proxy for institutional demand, slowed significantly during this low volatility period. This suggests that the main players are waiting for a breakout confirmed before adding to their positions. Once the volatility has returned, we were able to see a renewed interest from the institutions, guiding Bitcoin even higher.
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Conclusion
Bitcoin’s volatility is one of its lowest levels in history and these conditions have never lasted for a long time. When volatility compresses so much, it lays the foundations for an explosive move. The data suggest that a breakout is imminent, but if it is inclined bullish or bearish depends on macroeconomic conditions, feeling of investors and institutional flows.
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Disclaimer: This article is only for information purposes and should not be considered financial advice. Always do your searches before making any investment decision.