According to a PANews report on Aug. 12, CryptoQuant analyst Axel Adler Jr. said bitcoin's volatility has compressed to 3.8%, one of the lowest readings in nearly two years. The Bollinger Band width, which was still in double-digit territory in early July, has narrowed sharply since then. The ADX indicator, a gauge of trend strength, has dropped to 11, close to the lowest levels seen in recent years. Adler believes the market is currently in a tight consolidation phase with no clear directional bias. Based on historical patterns, extremely low volatility like this tends to be short-lived, and a substantial price move often follows. However, the direction of that move remains unknown at this stage. The analyst further noted that ADX is far below the 25 threshold typically used to identify an active trend, which means there are no active bullish or bearish signals right now. To break out of the consolidation, the BBR would need to expand from its compressed state, while ADX climbs above 25 and a clear directional signal emerges. Until such conditions appear, the risk of false breakouts will persist.
Bitcoin's volatility has compressed to 3.8%, putting it among the lowest readings in nearly two years, according to CryptoQuant analyst Axel Adler Jr. In a report from PANews on Aug. 12, Adler said the squeeze could be followed by a large price move, though the direction remains unclear.
Indicators point to a tight range
The Bollinger Band width, still in double digits in early July, has now narrowed sharply. At the same time, the ADX trend-strength indicator has dropped to 11, close to recent lows. Adler said that points to a market stuck in narrow consolidation without a clear directional bias.
Historically, periods of extremely low volatility have rarely lasted long, and they are often followed by a significant move. The catch, according to the analyst, is that the direction of that move is unknown.
What needs to happen for a breakout
Adler noted that ADX is still far below the 25 threshold normally used to identify an active trend, meaning there are no active bullish or bearish signals right now. To break out of the range, the Bollinger Band width would need to expand from its compressed state, ADX would need to climb above 25, and a clear directional signal would have to appear. Until that happens, the risk of false breakouts persists.
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