Two Bitcoin Indicators Pivot Simultaneously: CryptoQuant Signals a Macro Support Shift

As Bitcoin’s volatility-adjusted momentum dips below zero, the return of the risk oscillator to zero against a basket of macro assets has once again raised the downside risk seen in the previous three instances.

CryptoQuant.com reported that two indicators changed direction within the same week while Bitcoin was trading above $63,000. These signals, which typically do not pivot together, suggest that Bitcoin is struggling to find support from both its own trend and macro markets.

The risk oscillator compares Bitcoin to a basket consisting of a combination of the S&P 500, gold, crude oil, and the US dollar. As the indicator returns to the zero line, all three previous tests on the chart were followed by significant declines in Bitcoin’s price. During these periods, capital rotated from Bitcoin into the aforementioned asset basket.

Bitcoin’s macro support is weakening

CryptoQuant notes that this historical data should not be read as a definitive bearish signal. The three instances represent a small sample size, and the zero level is a threshold that could be broken or rejected, rather than a confirmation.

On the other hand, volatility-adjusted momentum, a Sharpe-like ratio, has dropped below zero. While raw 30-day momentum can exaggerate movements largely consisting of noise, this metric questions whether the move is worth the risk taken. Having been above +2 at the start of the year, the indicator has gradually surrendered these gains step by step.

Volatility squeeze does not indicate direction

The analyst stated that the squeeze in realized volatility merely builds up energy and does not dictate the direction of the breakout. While the two indicators together suggest a lack of support from both sides, it remains unclear whether the breakout will be to the downside; however, the analyst noted that it could occur under worse conditions compared to a month ago.