Bitcoin Risk-Off Signal Drops to 23.7, Indicating Low Correction Risk

The Bitcoin Risk-Off signal, an indicator that assesses correction risk using onchain and exchange data, recently dropped to its lowest level since March 2019, reaching 23.7. This signal is currently in the blue zone, which historically suggests low correction risk and a high probability of a bullish trend. When the oscillator rises above 60 or turns red, it implies a high risk of bearish movement.

In 2019, a similar drop in the Bitcoin Risk-Off signal preceded a significant rally, with Bitcoin's price surging by 1,550% and reaching above $68,000 in 2021. The Risk-Off signal combines six metrics: downside and upside volatility, exchange inflows, funding rates, futures open interest, and market capitalization. These metrics provide a balanced view of correction risk, making the signal a data-oriented gauge for market trends.

Several factors can explain the price disparity between the current market and the 2019 market. The launch of spot Bitcoin exchange-traded funds (ETFs) in the US in 2024 opened the floodgates to institutional capital, boosting demand and stabilizing prices. In fact, ETFs and public companies now hold 9% of the Bitcoin supply. This maturing market absorbs capital inflows with less price disruption. Thus, growing mainstream adoption, regulatory clarity, and Bitcoin’s increasing role as a hedge against inflation have bolstered its value, setting a higher price floor compared to 2019.

Data from Fidelity Digital Assets noted that Bitcoin’s volatility has decreased three to four times that of equity indexes, down from triple-digit volatility in its early years. Between 2019 and 2025, the 1-year annualized realized volatility dropped by more than 80%. This maturing market absorbs capital inflows with less price disruption. Thus, growing mainstream adoption, regulatory clarity, and Bitcoin’s increasing role as a hedge against inflation have bolstered its value, setting a higher price floor compared to 2019.

Cointelegraph recently reported that the Macro Chain Index (MCI), a composite of onchain and macroeconomic metrics, flashed a buy signal for the first time since 2022, when it accurately predicted the market bottom at $15,500. Historically, MCI’s RSI crossover has preceded massive rallies, such as the more than 500% surge in 2019. Combined with rising futures open interest and favorable funding rates, the MCI suggests Bitcoin could break $100,000 over the coming few weeks.

Anonymous crypto analyst Darkfost pointed out that Bitcoin’s network activity index has declined sharply, reflecting reduced transaction volume and fewer daily active addresses since December 2024. The drop in UTXOs further indicates waning demand for block space, a pattern often seen in bear markets. However, the analyst explained that it doesn’t confirm a bearish outlook. Macro indicators remain strongly bullish, suggesting this lull could be a strategic entry point for long-term investors.