Bitcoin ADX Reaches Two-Year Low: Volatility on the Horizon?

The Bitcoin price has been moving sideways for months and currently stands at $63K, down 1.5% over the past 24 hours. A widely used trend strength indicator now suggests that this could soon change. The ADX, or Average Directional Index, is hitting a low not seen in more than two years.

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In short:

• Bitcoin’s ADX hits the lowest level in more than two years.
• The indicator measures trend strength, not the direction of the price.
• Multiple indicators point to an upcoming price movement after months of silence.

What the ADX tells you about the market

The ADX is a technical indicator that measures the strength of a trend but says nothing about its direction. Whether Bitcoin goes up or down cannot be gleaned from it. What the indicator does make clear is how strong or weak the current market movement is. A low ADX points to a market without a clear trend, in which the price is effectively stuck within a range.

On a CryptoQuant chart, the ADX can be seen dropping below the level that has served as a floor for the past two years. The analyst behind the observation points out that such extremes have historically preceded periods of increased volatility. The Choppiness Index also gave a similar signal earlier.

Breakout expected after months of silence

Analyst Darkfost states that Bitcoin has been moving in a sideways range for quite some time and that the market will soon have to pick a direction. He points out that multiple indicators are simultaneously giving the same signal, reinforcing the picture that a move is on the way.

Darkfost does warn that the ADX is purely about trend strength. Anyone who reads a bullish or bearish prediction into it is drawing the wrong conclusion. The indicator only says that the current silence will not last forever. This ties in with signals from other on-chain indicators that also point to a tipping point in the market. According to him, investors would do well to remain extra alert in the coming weeks to what happens with the price.