Bitcoin Cycle Extremes Index Hits 8.8%: Compression Phase Signals Expansion Ahead

Bitcoin is trading at a critical level after losing the $110,000 support, a zone that had previously provided bulls with a strong defensive line. The recent breakdown underscores fading momentum, as buyers struggle to regain control following weeks of volatility. Since breaking above its all-time high, BTC has shown no meaningful signs of recovery, fueling speculation that the market could be entering a deeper corrective phase. Selling pressure continues to mount, and investors are now focused on whether Bitcoin can stabilize before further downside tests.

Despite the bearish tone in price action, onchain data paints a more nuanced picture. According to CryptoQuant, the Bitcoin network is currently in a compression phase. Historically, these phases act as precursors to expansion periods marked by heightened volatility and large directional moves. This pattern suggests that while short-term conditions appear weak, the groundwork is being laid for the next significant swing in market structure.

The coming days will be decisive. Bulls must reclaim key levels to avoid further capitulation, while bears see room for another leg down. Either way, the compression phase indicates that a major breakout—up or down—could be approaching, making Bitcoin’s current position one of high stakes and high anticipation.

Bitcoin Cycle Extremes Index Signals Compression Phase

Crypto Analyst Axel Adler has recently shared insights into the Adjusted Bitcoin Cycle Extremes Index, a tool designed to measure market conditions based on volatility within halving cycles. The index combines several key on-chain metrics—SOPR (Spent Output Profit Ratio), MVRV (Market Value to Realized Value), NUPL (Net Unrealized Profit/Loss), and NVT (Network Value to Transactions)—to provide a broader picture of where Bitcoin stands in its cycle.

At present, the index is reading 8.8%, which places Bitcoin firmly within a bottom zone close to compression. Historically, such compression phases have acted as precursors to expansion, where price and network activity experience heightened volatility and directional moves. In simple terms, the market is currently in a quiet stage, storing energy for the next major shift.

Analysts are divided on what comes next. Some argue that this compression marks the end of the bull cycle, one that began in 2023 and delivered over 600% gains from its lows. From this perspective, Bitcoin’s recent loss of momentum and inability to hold above $110K may be early signs of a prolonged corrective phase.

On the other hand, a growing camp of analysts sees this compression not as an ending but as a launchpad for the next leg higher. With institutional inflows, global adoption, and whale accumulation still strong, they believe Bitcoin could surprise the market by pushing further into uncharted territory.

Ultimately, the compression-to-expansion dynamic suggests that the coming months will be decisive. Whether this phase resolves in a bullish continuation or the beginning of a macro correction, Bitcoin is approaching a pivotal moment that will define the next chapter of its cycle.

Bulls Hold Demand Amid Bearish Pressure

Bitcoin (BTC) is currently trading around $109,697, showing modest recovery after recently dipping below the critical $110K support. The chart highlights how BTC remains under heavy selling pressure, with price action struggling to regain momentum following the rejection near $123K, a level that marked the most recent local top.

The daily moving averages emphasize the market’s fragile state. The 50-day SMA is beginning to slope downward, while the 100-day SMA hovers near $111,700, acting as a resistance barrier. If BTC fails to reclaim this level, sellers could push the price back toward the 200-day SMA around $101,300, which represents the next major support zone.

Market structure suggests BTC is in a consolidation-to-correction phase. The sharp decline from August highs signals fading bullish strength, and despite attempts at recovery, the price remains capped below short-term resistance. Bulls must reclaim $112K–$115K to shift momentum; otherwise, continued weakness could invite deeper tests of $105K–$101K.

Bitcoin sits in a make-or-break zone, where holding above $109K could stabilize sentiment. However, without strong buying support, the risk of another leg lower persists, especially if broader market volatility continues to weigh on risk assets.

Featured image from Dall-E, chart from TradingView