Bitcoin’s volatility trap score has climbed to 91 as BTC approaches the $65,000 mark, signaling an increasingly compressed market even as short-term momentum begins to improve.

Bitcoin was trading near $63,500 on August 18, gaining about 1% over the previous 24 hours after recovering from an intraday low of $62,751, according to CoinGecko. The rebound pushed BTC above the 78.6% Fibonacci retracement at $63,152 and brought the key $65,000 resistance level closer into view.

The broader crypto market remains range-bound as traders await several potential catalysts in September, including further discussions around the CLARITY Act and the release of FOMC minutes on September 16.

Bitcoin’s Short-Term Momentum Improves

Bitcoin’s 4-hour technical setup has strengthened. BTC reclaimed the Bollinger Bands’ middle line at $63,173 and moved above the upper band near $63,774, pointing to increased buying pressure after weeks of consolidation.

Chaikin Money Flow on the 4-hour chart also rose to 0.24, suggesting that the recent upward move is being supported by capital inflows. Holding above $63,774 could keep the $64,700-$65,000 resistance zone as the next target.

The daily picture remains more cautious. The MACD was around -183, while the signal line stood near -101 and the histogram remained negative at approximately -82. This indicates that the bearish trend from the previous week has not yet been fully reversed.

Meanwhile, daily Chaikin Money Flow remained slightly negative at -0.05. The divergence between the two timeframes suggests that short-term buyers are becoming more active, although broader capital flows remain weak.

Volatility Trap Signals Potential for a Major Move

Glassnode co-founder Rafael Schultze-Kraft said on X that Bitcoin’s implied volatility has dropped into the lowest 2% of its historical range. Despite that decline, implied volatility remains about 1.5 times higher than realized volatility.

The resulting compression has lifted Glassnode’s volatility trap score to 91 out of 100, the highest level in more than three and a half years. Schultze-Kraft emphasized that the reading does not indicate whether the next major move will be bullish or bearish. Instead, it highlights an unusually compressed market that could be vulnerable to a sharp breakout.

CoinGlass liquidation data shows a significant concentration of positions around $64,000, followed by another large cluster near $64,700. A sustained move through these levels could trigger short liquidations, potentially adding fuel to Bitcoin’s advance toward $65,000.

On the downside, liquidity is concentrated near $62,700 and $62,200. A rejection from the upper range could therefore bring those levels back into focus. The setup broadly matches the $63,000 support and $65,000-$65,600 resistance areas identified in an August 18 market snapshot from Sunday Guardian, which also noted more than $385 million in spot Bitcoin ETF outflows during the previous week.

Key Bitcoin Levels to Monitor

A daily close above $64,000 would strengthen the recovery and could set up a test of $65,000. Breaking that resistance could expose the next major target near $67,357, corresponding to the 61.8% Fibonacci retracement of Bitcoin’s decline from $82,825 to $57,796.

A failure to defend $63,152, however, could send BTC toward $62,500. Further selling could bring $60,000 into play, while $57,796 remains the key broader downside marker.

BTSE chief operating officer Jeff Mei said market participants are watching the upcoming FOMC minutes for clues about potential rate cuts. Traders are also monitoring whether the CLARITY Act receives renewed attention in the Senate ahead of the legislative recess.

Mei also highlighted competition from strong institutional demand for AI stocks. If that demand continues, capital could rotate between AI equities and cryptocurrencies, potentially limiting Bitcoin’s upside and keeping the broader crypto market under pressure.