Bitcoin Volatility Signals Flash Amid Debate Over Four-Year Cycle Breakdown

Technical Indicators Signal Potential Price Swing

Bitcoin began 2026 trading at $87,500 as global markets prepared for their first traditional finance trading session of the year, with technical indicators suggesting significant volatility may be imminent ^[1].

Multiple technical signals are pointing toward potential major price movement. Trader Jelle identified a bullish divergence on the relative strength index (RSI) indicator on three-day timeframes, noting that Bitcoin "looks good for upside this quarter" with a "locked in 3-day bull div, right on top of key support" ^[1].

Analytics account Quantdata21 highlighted the convergence of low weekly RSI and record narrowing on the Bollinger Bands volatility index as indicators of impending volatility. The Bollinger BandWidth derivative had been setting records throughout the fourth quarter of 2025, suggesting a major upward move could be due ^[1].

"There is only one other occasion that daily bollinger band width has squeezed this tight with weekly RSI below 40," Quantdata21 stated. "That was january 2023, and we all know what happened to bitcoin from there" ^[1].

Crypto trader and entrepreneur Michaël van de Poppe predicted near-term price gains, suggesting that Bitcoin would "test $90K in the coming week and start breaking upwards," citing increasing accessibility for investors to enter the market ^[1].

Historic Cycle Pattern Breaks Down

Bitcoin's price performance in 2025 marked a significant departure from historical patterns, as it completed its first red 12-month candle in a post-halving year, following a difficult fourth quarter for bulls ^[1].

This unprecedented outcome has sparked debate among market participants about the relevance of Bitcoin's traditional four-year price cycle theory. Simon Dixon, founder and CEO of Bitcoin security firm Bnk To The Future, declared "RIP Bitcoin 4 Year Cycle," suggesting that 2026 would represent a "new era" for Bitcoin ^[1].

One analyst explained the shift by noting that "cycles were never a law of nature" but rather "a liquidity pattern," adding that "different macro, different participants different constraints" had changed the market dynamics ^[1].

Despite the breakdown of historical patterns, various forecasts still anticipate new all-time highs in 2026, with $150,000 emerging as a particularly popular target among analysts, including Strategy CEO Michael Saylor ^[1].

Options Market Impact Under Scrutiny

As institutional interest in Bitcoin continues, questions have emerged about whether options trading strategies are affecting price dynamics. The aggregate Bitcoin options open interest climbed to $49 billion in December 2025 from $39 billion in December 2024, with particular attention on covered call strategies ^[2].

Some market observers have theorized that covered call strategies, where investors sell call options on their Bitcoin holdings to generate income, may be creating price ceilings. The strategy gained traction as cash-and-carry trade premiums collapsed from 10-15% in late 2024 to below 5% by November 2025, pushing funds toward covered calls offering 12-18% annualized yields ^[2].

However, data suggests this theory may not hold. The put-to-call ratio has remained stable below 60%, indicating that for every yield-focused seller, buyers continue positioning for potential breakouts ^[2]. Additionally, while put options now trade at a 5% premium compared to a 2% discount in late 2024, implied volatility has declined to 45% or lower from 57% in late 2024, reducing the premiums earned by option sellers ^[2].

The stable put-to-call ratios and rising put demand suggest that hedging and yield strategies coexist with bullish positioning rather than structurally suppressing Bitcoin's price ^[2].