Bitcoin’s volatility indicator is signaling conditions similar to those that preceded a major rally in late 2023, as the Bollinger BandWidth reaches unprecedented lows and hints at a potentially explosive price move into year-end.
Record-Low BandWidth Reignites Parabolic Rally Expectations
Bitcoin’s Bollinger BandWidth — which measures the percentage distance between the upper and lower Bollinger Bands — has dropped to a new all-time low on the monthly timeframe.
The compression suggests volatility is approaching a breaking point, according to macro strategist Gert van Lagen, who highlighted the move in an X thread on Wednesday.
Historical data shows that the BandWidth rarely falls below 100 on its scale; when it has, Bitcoin typically followed with a sharp breakout to the upside. Van Lagen described these rare readings as precursors to “a direct parabolic leg up.”
This pattern last appeared in late 2023, when Bitcoin staged a rally of roughly 40% over the following weeks.
Signal Strengthens Despite Recent Drawdowns
Notably, the indicator avoided flashing a bearish “red” trigger even as Bitcoin corrected sharply in recent weeks. That resilience is fueling speculation that the recent pullback may have been a volatility reset rather than the start of a broader downtrend.
On Wednesday, Bitcoin climbed to its highest level in more than two weeks, briefly approaching the $94,000 mark as markets reacted to speculation about a pro-crypto Federal Reserve chair nominee.
Market structure has also improved across shorter timeframes. Trader Daan Crypto Trades noted that Bitcoin is now printing both higher highs and higher lows, restoring a bullish structure — though he cautioned that sustained strength above current price levels is needed to confirm momentum.
Yearly Candle in Focus as BTC Hovers Near 2025 Open
Bitcoin began 2025 at approximately $93,500, making the current price zone a crucial battleground for the yearly chart. Analysts argue that holding above this level could reinforce the four-year cycle dynamics that traders closely monitor.
Rekt Capital emphasized that Bitcoin only needs about 2% additional upside to close the year above its key cycle level and secure a green annual candle. With a full month remaining, the possibility of a decisive year-end move remains open.
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