Indicator Signals Onset of Bitcoin’s ‘Extreme’ Volatility Phase

Analysts uncertain about movement direction

The Bollinger Bands (BB) on the monthly chart of the leading cryptocurrency have reached their lowest level ever, indicating “extreme” volatility. This was highlighted by technical analyst Matthew Hyland.

BB is a volatility indicator used to determine price highs and lows. When the indicator is near the upper line, it suggests overbought conditions, and near the lower line, it indicates oversold conditions.

The unusual position of the metric has also been noted by other market participants.

The Bollinger Bands on the 1M (monthly) are at historical tightness. This has previously led to heavy volatility to the upside (see chart).

Bitcoin could be in for a spicy Q4 🐂🫡 pic.twitter.com/sOmeLIYPgT

— 👑Crypto Caesar👑™️ (@crypto_caesar1) September 6, 2025

“Previously [the drop of the indicator to lows] led to high volatility. Bitcoin might be in for a turbulent rally in Q4,” noted the trader known as Crypto Caesar.

Investor Yannis Andreou added that all previous contractions of the Bollinger Bands in 2012, 2016, and 2020 preceded “explosive price growth” of the leading cryptocurrency.

“The current situation is even more compressed, indicating the potential for the largest move in Bitcoin’s history. The direction is not guaranteed, but trends suggest a continuation,” the expert emphasized.

In his view, in the coming months, digital gold will show a significant move—either a breakout to new highs or a “shocking” reversal.

Beyond Technical Charts

Despite the historical breakdown of the Bollinger Bands, the crypto market’s main focus remains on U.S. macroeconomic data and the actions of the Federal Reserve at the meeting on September 17.

On September 10, negative data on industrial inflation in the United States brought Bitcoin back to $114,000. On September 11, the Consumer Price Index is expected to be released.

Positive indicators are likely to incline the Fed towards a rate cut. According to the CME FedWatch Tool, market participants assess the probability of this event at 100%—opinions are divided on the magnitude of the cut.

92% anticipate a 25 basis point cut, while 8% expect a 50 basis point reduction.

“If a [50-point cut] occurs, cryptocurrency will soar above previous highs,” wrote the user known as Mister Crypto.  

However, Goldman Sachs CEO David Solomon considers the likelihood of such a significant reduction to be very low. 

“I am almost certain that the U.S. will cut the rate by 25 basis points. If you look at the labor market, there is no doubt that some easing can be observed,” he clarified.

Solomon anticipates potentially two more rate cuts this year, depending on the macroeconomic situation.

Analysts at Santiment predicted a Bitcoin rebound amid growing bearish sentiment.