Analyst: Bitcoin Volatility Drops to Near Two-Year Low, Market May Be Poised for Major Swing

August 12th, CryptoQuant analyst Axel Adler Jr. posted that the current Bitcoin volatility has compressed to an extremely low level, and the market has not yet formed a clear direction. The Bollinger Band width is currently around 3.8% to 3.9%, one of the lowest levels in the past two years, while it was still at a double-digit level in early July. He pointed out that a significant narrowing of the Bollinger Band usually means that the market is in a compression phase before volatility expands, but the indicator itself cannot determine the direction of the next trend.

In terms of trend strength, the Bitcoin ADX indicator has now dropped to 11, close to a recent low, significantly below the 25 threshold used by its model to confirm trends. Currently, TrendActive has not yet been activated, and neither a bullish nor bearish signal has appeared; the last direction signal in early July was bearish, but the current market structure no longer confirms this signal.

Adler stated that for the market to enter a new trend phase, it needs to see the Bollinger Band width expand again from its current compressed state, while the ADX rises above 25. Subsequently, the direction can be determined based on the relationship between +DI and -DI: if one of them leads by more than 5 points, it may trigger a corresponding bullish or bearish signal.

He believes that Bitcoin is still in a consolidation phase, with both volatility and trend strength at low levels, and the short-term risk of a false breakout still exists. The current structure increases the possibility of a significant increase in volatility in the future, but it is still uncertain whether the price will ultimately break out to the upside or downside.