Bitcoin has been struggling with lower lows in recent weeks, leaving many investors questioning whether the asset is on the brink of a major bear cycle. However, a rare data point tied to the US Dollar Strength Index (DXY) suggests that a significant shift in market dynamics may be imminent. This bitcoin buy signal, which has only appeared three times in BTC’s history, could point to a bullish reversal despite the current bearish sentiment.

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Bitcoin: This Had Only Ever Happened 3x Before

BTC vs DXY Inverse Relationship

Bitcoin’s price action has long been inversely correlated with the US Dollar Strength Index (DXY). Historically, when the DXY strengthens, BTC tends to struggle, while a declining DXY often creates favorable macroeconomic conditions for Bitcoin price appreciation.

Despite this historically bullish influence, Bitcoin’s price has continued to retreat, recently dropping from over $100,000 to below $80,000. However, past occurrences of this rare DXY retracement suggest that a delayed but meaningful BTC rebound could still be in play.

Bitcoin Buy Signal Historic Occurrences

Currently, the DXY has been in a sharp decline, a decrease of over 3.4% within a single week, a rate of change that has only been observed three times in Bitcoin’s entire trading history.

To understand the potential impact of this DXY signal, let’s examine the three prior instances when this sharp decline in the US dollar strength index occurred:

• 2015 Post-Bear Market Bottom

The first occurrence was after BTC’s price had bottomed out in 2015. Following a period of sideways consolidation, BTC’s price experienced a significant upward surge, gaining over 200% within months.

The second instance occurred in early 2020, following the sharp market collapse triggered by the COVID-19 pandemic. Similar to the 2015 case, BTC initially experienced choppy price action before a rapid upward trend emerged, culminating in a multi-month rally.

• 2022 Bear Market Recovery

The most recent instance happened at the end of the 2022 bear market. After an initial period of price stabilization, BTC followed with a sustained recovery, climbing to substantially higher prices and kicking off the current bull cycle over the following months.

In each case, the sharp decline in the DXY was followed by a consolidation phase before BTC embarked on a significant bullish run. Overlaying the price action of these three instances onto our current price action we get an idea of how things could play out in the near future.

Equity Markets Correlation

Interestingly, this pattern isn’t limited to Bitcoin. A similar relationship can be observed in traditional markets, particularly in the Nasdaq and the S&P 500. When the DXY retraces sharply, equity markets have historically outperformed their baseline returns.

The all-time average 30-day return for the Nasdaq following a similar DXY decline stands at 4.29%, well above the standard 30-day return of 1.91%. Extending the window to 60 days, the Nasdaq’s average return increases to nearly 7%, nearly doubling the typical performance of 3.88%. This correlation suggests that Bitcoin’s performance following a sharp DXY retracement aligns with historical broader market trends, reinforcing the argument for a delayed but inevitable positive response.

Conclusion

The current decline in the US Dollar Strength Index represents a rare and historically bullish Bitcoin buy signal. Although BTC’s immediate price action remains weak, historical precedents suggest that a period of consolidation will likely be followed by a significant rally. Especially when reinforced by observing the same response in indexes such as the Nasdaq and S&P 500, the broader macroeconomic environment is setting up favorably for BTC.

Explore live data, charts, indicators, and in-depth research to stay ahead of Bitcoin’s price action at Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

Bitcoin price fluctuations are frequently evaluated using on-chain metrics, technical indicators, and macroeconomic trends. However, one of the most underappreciated yet significant factors in Bitcoin’s price action is Global Liquidity. Many investors may be underutilizing this metric or even misunderstanding how it impacts BTC’s cyclical trends.

Impact on Bitcoin

With increasing discussions on platforms like Twitter (X) and analysts dissecting liquidity charts, understanding the relationship between Global Liquidity and Bitcoin has become crucial for traders and long-term investors alike. However, recent divergences suggest that traditional interpretations might require a more nuanced approach.

Global M2 money supply refers to the total liquid money supply, including cash, checking deposits, and easily convertible near-money assets. Traditionally, when Global M2 expands, capital seeks higher-yielding assets, including Bitcoin, equities, and commodities. Conversely, when M2 contracts, risk assets often decline in value due to tighter liquidity conditions.

View Live Chart

Historically, we’ve seen Bitcoin’s price follow the Global M2 expansion, rising when liquidity increases and suffering during contractions. However, in this cycle, we’ve seen a deviation: despite a steady increase in Global M2, Bitcoin’s price action has shown inconsistencies.

Year-on-Year Change

Rather than simply tracking the absolute value of Global M2, a more insightful approach is to analyze its year-on-year rate of change. This method accounts for the velocity of liquidity expansion or contraction, revealing a clearer correlation with Bitcoin’s performance.

When we compare the Bitcoin Year-on-Year Return (YoY) with Global M2 YoY Change, a much stronger relationship emerges. Bitcoin’s strongest bull runs align with periods of rapid liquidity expansion, while contractions precede price declines or prolonged consolidation phases.

View Live Chart

For example, during Bitcoin’s consolidation phase in early 2025, Global M2 was steadily increasing, but its rate of change was flat. Only when M2’s expansion accelerates noticeably can Bitcoin break out towards new highs.

Liquidity Lag

Another key observation is that Global Liquidity does not impact Bitcoin instantly. Research suggests that Bitcoin lags behind Global Liquidity changes by approximately 10 weeks. By shifting the Global Liquidity indicator forward by 10 weeks, the correlation with Bitcoin strengthens significantly. However, further optimization suggests that the most accurate lag is around 56 to 60 days, or approximately two months.

Bitcoin Outlook

Throughout most of 2025, Global Liquidity has been in a flattening phase following a significant expansion in late 2024 that propelled Bitcoin to new highs. This flattening coincided with Bitcoin’s consolidation and retracement to around $80,000. However, if historical trends hold, a recent resurgence in liquidity growth should translate into another leg up for BTC by late March.

Conclusion

Monitoring Global Liquidity is an essential macro indicator for anticipating Bitcoin’s trajectory. However, rather than relying on static M2 data, focusing on its rate of change and understanding the two-month lag effect offers a much more precise predictive framework.

As Global economic conditions evolve and central banks adjust their monetary policies, Bitcoin’s price action will continue to be influenced by liquidity trends. The coming weeks will be pivotal; Bitcoin could be poised for a major move if Global Liquidity continues its renewed acceleration.

Enjoyed this? Explore more on Bitcoin price shifts and market cycles in our recent guide to mastering Bitcoin on-chain data.

Explore live data, charts, indicators, and in-depth research to stay ahead of Bitcoin’s price action at Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

Bitcoin appears to be on the verge of a major price movement, and data suggests that volatility could return in a big way. With Bitcoin’s price action stagnating over the past few weeks, let’s analyze the key indicators to understand the potential scale and direction of the upcoming move.

Volatility

A great place to start is Bitcoin Volatility, which tracks price action and volatility over time. By isolating the past year’s data and focusing on weekly volatility, we observe that Bitcoin’s price recently has been relatively flat, hovering in the $90,000 range. This prolonged sideways action has resulted in a dramatic drop in volatility, meaning Bitcoin is experiencing some of its most stable price behavior in recent history.

View Live Chart

Historically, such low volatility levels are rare and tend to be short-lived. When looking at previous instances where volatility was this low, Bitcoin followed up with significant price movements:

A rally from $50,000 to a then all-time high of $74,000.

A drop from $66,000 to $55,000, followed by another surge to $68,000.

A period of stagnation around $60,000 before a surge to $100,000, its current all-time high.

Every time volatility dropped to this level, Bitcoin experienced a move of at least 20-30%, if not more, in the following weeks.

Bollinger Bands

To further confirm this, the Bollinger Bands Width indicator, a tool that measures volatility by tracking price deviation from a moving average, also signals that Bitcoin is coiled for a big move. The quarterly bands are currently at their tightest levels since 2012, meaning that price compression is at an extreme. The last time this happened, Bitcoin experienced a 200% price surge within weeks.

Examining previous occurrences of similar tight Bollinger Band setups, we find:

2018: A 50% drop from $6,000 to $3,000.

2020: A breakout from $9,000 to $12,000, setting up the eventual rally to $40,000.

2023: A slow accumulation phase around $25,000 before a rapid jump to $32,000.

Potential Direction

Understanding direction is harder than predicting volatility, but we have clues. One strong indicator is the US Dollar Strength Index (DXY) YoY, which has historically moved inversely to Bitcoin. Recently, the DXY has been rallying hard, yet Bitcoin has held its ground. This suggests Bitcoin has underlying strength, even in less favorable macro conditions.

View Live Chart

Additionally, political factors may play a role. Historically, when Donald Trump took office in 2017, the DXY declined, and Bitcoin saw a massive bull run from $1,000 to $20,000. With a similar setup potentially unfolding in 2025, we may see a repeat of this dynamic.

ETF Inflows

Furthermore, Bitcoin ETF inflows, a proxy for institutional demand, have slowed significantly during this period of low volatility. This suggests that major players are waiting for a confirmed breakout before adding to their positions. Once volatility returns, we could see renewed interest from institutions, driving Bitcoin even higher.

View Live Chart

Conclusion

Bitcoin’s volatility is at one of its lowest levels in history, and such conditions have never lasted long. When volatility compresses this much, it sets the stage for an explosive move. The data suggests a breakout is imminent, but whether it leans bullish or bearish depends on macroeconomic conditions, investor sentiment, and institutional flows.

For more detailed Bitcoin analysis and to access advanced features like live charts, personalized indicator alerts, and in-depth industry reports, check out Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.