Analyst: Bitcoin volatility has fallen to near its lowest level in the past two years, and the market may be brewing sharp fluctuations.

CryptoQuant analyst Axel Adler Jr. wrote in a post that Bitcoin’s current volatility has compressed to an extremely low level, with no clear market direction emerging for now. The Bollinger Band width is currently around 3.8% to 3.9%, one of the lowest levels in the past two years, compared to double-digit levels in early July. He noted that a sharp contraction of the Bollinger Bands typically signals the market entering a consolidation phase before volatility expansion, though the indicator alone cannot determine the direction of the next price move. In terms of trend strength, Bitcoin’s Average Directional Index (ADX) has dropped to 11, near recent lows and well below the 25 threshold his model uses to confirm a trend. The TrendActive indicator remains inactive, with neither bullish nor bearish signals triggered; the last directional signal in early July was bearish, but the current market structure no longer supports that signal. Adler stated that for the market to enter a new trend phase, the Bollinger Band width needs to expand again from its current compressed state, alongside the ADX breaking above 25. The direction can then be judged based on the relationship between the Positive Directional Indicator (+DI) and Negative Directional Indicator (-DI): if either leads by more than 5 points, a corresponding bullish or bearish signal may be triggered. He believes Bitcoin is still in a consolidation phase, with low volatility and trend strength, and the risk of short-term false breakouts remains. The current structure increases the likelihood of significant volatility expansion ahead, but it is still impossible to determine whether the price will eventually break out upward or downward.